Official Blog of Flux Power Inc.
March 28, 2017
We are pleased to announce that Flux Power and our CEO Ron Dutt have been recognized by Food Logistics Magazine for our efforts in bringing our LiFT Pack lithium-ion battery technology to benefit operations in the food and beverage industry supply chain. In Food Logistics’ annual survey, Ron Dutt was named one of Food Logistics Magazine’s 2017 Champions: Rock Stars of the Supply Chain.
With over 24,000 subscribers and an active website and social media presence, Food Logistics is the only publication exclusively dedicated to food and beverage industry executives. While industrial battery executives are not often thought of as “Rocks Stars,” we completely agree that Ron is our star, and we are extremely grateful for the food and beverage industry’s acknowledgement of the hard work of the entire Flux team under Ron’s steady leadership. Flux’s press release announcing this honor can be accessed here.
For the past three years, Flux has been singularly focused on transforming the energy storage options available to the food logistics industry and other material handling intensive businesses. Flux’s state-of-the-art lithium forklift batteries deliver improved performance, efficiency, run times and useful life, with little or no maintenance and no risk of acid spills or vapor – all at a substantially lower total cost of ownership. It’s a win-win for the customer and the food logistics industry.
The acknowledgement by Food Logistics underscores the increasing interest, piloting and shipments of Flux LiFT Pack batteries to power multi-shift operations at a growing base of food industry distribution centers across America. Moreover, Flux LiFT Packs are based on safe cell chemistry and are the first UL 2271 listed lithium battery offerings to power forklifts – the indispensable workhorses of food logistics.
We thank Food Logistics for their coverage of important news and trends in the industry and in particular for highlighting how Flux battery solutions can support the future success of food and beverage industry participants. Not only does this honor support our existing dialogues, but the publication’s reach will expand awareness of the coming new age of Flux battery technology to more effectively power food and beverage operations.
Flux Power Holdings
Q1 ’17 Q&A with CEO Ron Dutt
1. What is the status of Flux’s lithium pack built for airline ground support equipment?
A: During our fiscal fourth quarter of 2016, we successfully completed a pilot of our custom-developed, 72-volt battery pack to power electric aviation ground support equipment with a leading regional airline at Los Angeles International Airport. Feedback on our packs from both the airline and our distribution partner is very positive and Flux expects to break through with first sales to this customer in the quarter to come. The successful development and 3-month pilot highlights the scalability of our design and engineering capabilities, as well as, our proprietary battery management technology for a broad array of motive power applications. Importantly it also moves us into a customer price point of roughly $20,000 to $25,000 per pack for several power rating alternatives, creating an excellent new leg of growth potential.
LAX is also the site of a second trial with another major airline that is progressing well. The industry has taken note of the performance features of our lithium power solution and are eager to upgrade past legacy sources of power for ground support equipment. Performance of our lithium packs is apparent, they only remaining hurdle to firm orders is to demonstrate cost value proposition of lithium power to the accountants who keep a firm eye on initial spending decisions.
Charlatte, the leading manufacturer of battery powered electric airport vehicles throughout Europe and the USA, is now conducting a review and trial of our GSE pack. We believe the support of Charlatte will be a major influence in our exposure and sales growth.
2. Can you talk about some of the large accounts that have just started the piloting process for their walkie pallet jack forklift fleets?
A: Flux has on-boarded more than a dozen large accounts over the last two years all of whom have transacted modest sales to date as a precursor to full deployment at some point in the future. More recently, Flux has commenced the piloting process with another dozen or more large accounts that have caught wind through the industry grapevine of the performance and long term cost benefits of our lithium power solution. I define ‘large accounts’ as an organization that maintains anywhere from 100 – 500 walkie pallet jacks in their fleet of equipment and in most cases owns or rents larger forklifts such as End Riders (a Class III cousin of walkie pallet jacks) in addition to Class I vehicles.
The most active interest in our LiFT Packs continues to come from companies involved with food and beverage distribution, grocery stores and specialty retail operations.
3. What is the feedback from the OEM’s on the current lineup of UL Listed LiFT Packs
A: I met with Toyota and Crown at their headquarters over the summer to give them a Flux Power business update as well as to collectively strategize on our sales pipeline. OEM’s are obviously very much aware of the entire forklift power ecosystem and see strong demand for lithium-based alternative power solutions. These OEMs, by the way, have approved our packs for use on their lift equipment. It just so happens that Flux believes that we have the premier lithium-based solution due in part to our advanced technology and first-mover advantage including the only UL Listed product in this industry. Equally important is the goodwill and trusted relationships Flux has built with a variety of dealers, distributors and clients; those parties are the beneficiaries of our commitment to client service.
4. Why are Flux LiFT Packs such a good fit for the food service industry?
We’ve been very impressed with the vision and openness of the food industry to trying a new power solution for their forklifts. The importance of reliability and performance, combined with a lower total cost of ownership was quick to resonate with this audience, generating some of our earliest customers and pilots. We are grateful for this support. Now that we have built in customer requested features and secured UL and OEM approvals, we’re ramping our shipments and our production capacity to serve the demand we have created.
Flux batteries provide an enormous opportunity to optimize food industry supply chains by enhancing productivity, providing faster charging, longer operating times and eliminating battery maintenance while also reducing fixed costs. Our “LiFT Packs” are also an environmentally friendly battery solution that frees the food industry from the maintenance, venting, safety, performance, useful life and other drawbacks of lead acid batteries.
5. Can you give a high level overview of your battery management system?
Our systems use lithium-ion cells that are denser in energy than traditional lead-acid batteries, which allow our batteries to hold more charge over the same weight. In addition, our BMS protects the lithium-ion batteries enabling the lithium-ion batteries to reach their full life and cycle potential and generating longer run times than lead-acid based batteries. Longer run times equates to fewer battery changes and therefore fewer costs over the same time period. Our systems manage individual cells and their charge cycles, which generally allows for more consistent discharge capability and ease of maintenance over an unmanaged battery. Through our BMS, we have enhanced battery systems overall to provide safer, more reliable and extended life rechargeable energy storage systems for applications including motive, marine, industrial, military, stationary, and grid management markets. The lithium chemistry in our cells, Lithium iron phosphate, is one of the safest, most cost effective, and widely accepted Lithium alternatives available.
September 7, 2016
Greetings Flux Stakeholders:
While Tesla’s Elon Musk seems to grab all the media attention – here at Flux there is great momentum building for new battery technologies for industrial motive equipment. The prospect of new lithium-ion power is a similarly transformative opportunity for those who have had to get by on decades old lead-acid energy storage.
Flux Power is a leader in bringing new efficient, cost effective and environmentally sensitive battery solutions to industrial uses, with a current focus on forklifts and more recently extending our capabilities to airport ground support vehicles.
My purpose in writing today is to update you on how we are advancing Flux’s products and market opportunities in a very meaningful way. It is really quite remarkable that just 3 years ago – we had not yet entered the industrial energy storage market, yet now we are a clear leader in this developing space.
Flux battery technology is well received in our target markets where we have built close relationships with leading OEMs, distribution partners and end-users. After several years of hard work by our team introducing partners and customers to our prototype and production models, we now have state-of-the-art products and technology and in-depth expertise that we build into our newest solutions. Each day the capabilities and potential of our organization grows, while also positioning Flux to pursue an even larger segment of the industrial motive power market.
A meaningful amount of resources have been spent the last few months addressing product warranty issues in our earlier prototype models. However, there is a very tangible benefit from these client service costs by demonstrating our loyalty and credibility as a long-term partner in the eyes of our customers, distributors and OEMs. The overwhelming majority of our largest customer opportunities remain solidly engaged with Flux and are eager to move forward with final trials and deployments as our production capacity ramps to commercial levels over the balance of calendar 2016. At the same time, we are also adding significant new prospects to our pipeline.
Class III Walkie Forklifts
As you know, our primary focus has been with our entry-level LiFT Pack line to power walkie pallet jack forklifts. The pace of sales the last few quarters has been limited by our focus on converting Flux’s production from small-run production and prototyping into large scale production of our UL-listed products. But what our revenues do not show is the deliberate piloting of Flux LiFT Packs by marquee accounts with significant material handling demands that require them to maintain large fleets of forklifts.
We purposely dialed down production over the last two quarters in order to incorporate all the improvements gleaned from the UL review process last winter as well implement important engineering features that stem from our model changeover. We have also spent the past several months building specialized assembly and testing stations that are designed to speed production time frames by automating many facets of testing and assembly.
Flux has recently begun to ramp production levels on our factory floor, and despite some expected hiccups along the way, we believe we remain on target to meet our goal of producing 100 packs per month by early September. Many of our design and production enhancements, including relationships with new manufacturing partners, should contribute substantially to our gross margins; financial improvements you should start to see in our fiscal 2nd quarter ending December 2016, with further improvements thereafter.
Airport Ground Support Vehicles
We recently completed a very successful three-month pilot of Flux’s ‘Airport Pack’ for ground support vehicles by a leading regional airline at Los Angeles International Airport (LAX). This exciting business development initiative for larger, higher power storage solutions was spearheaded by Averest, Inc., a leading distributor of industrial batteries and chargers for aviation ground support.
The successful development and 3-month pilot highlights the scalability of Flux Power’s design and engineering capabilities as well as our proprietary battery management technology for a broad array of motive power applications. Importantly it also moves us into a customer price point of roughly $20,000 to $25,000 per pack for several power rating alternatives, creating an excellent new leg of growth potential.
Interest in the benefits of lithium-ion storage in Airport ground support equipment seems strong, as we have redeployed this same Airport Pack to another major airline carrier, also at LAX, for internal piloting over the next few months. And Averest is also working on a third pilot opportunity in the Pacific Northwest for an additional Airport Pack that we just completed.
To build visibility and interest in this compelling new alternative to lead-acid batteries for ground support equipment, Flux will be exhibiting at the International Airport Ground Support Expo in Las Vegas with our industry partner Averest. This expo is the most significant annual forum for the ground support equipment industry, providing significant visibility for Flux in global market with an estimated 20,000 ground support vehicles that could benefit from better and lower total cost power source.
Class I Forklift Opportunity Emerges
An exciting byproduct of our work in the Class III Lift Truck market has been a recent rise in OEM interest for Flux to develop, larger and more powerful lithium-ion solutions to address the far larger Class I forklift market. This interest is not without precedent, as Flux has already demonstrated its ability to scale its solutions in much higher performance requirements needed to address the Class I opportunity. While we still have much work to do on executing on our Class III LiFT Pack opportunity, we are encouraged to see interest in a Class I opportunity and feel confident our ground support equipment success provides a clear path to larger forklift solutions.
As our recent public filings indicate, Flux has been successful in attracting additional capital to fund our product development and to move into full-scale production and commercialization. Over the past few months Flux has successfully raised over $3 million, comprised of $2.1 million in new equity investment, along with the conversion of $1.7 million of debt held by our largest shareholder Esenjay Investments into common stock, all priced at $0.04 per share with no warrants.
Flux greatly appreciates the financial commitment from both existing and new shareholders to help fund Flux’s move into large scale commercial production. Particular thanks go to Michael Johnson, a Flux Director and via Esenjay, the Company’s largest investor, for his tremendous financial and strategic support of the Flux mission the past several years.
In summary, Flux has propelled itself to a leadership position in the emerging market for lithium-ion to replace lead-acid in industrial motive power. Over the next year it is our singular focus to convert this position into a significant and growing revenue stream with solid and improving gross profit margins.
I look forward to updating you further on our progress in late September when we expect to report our annual results for fiscal year 2016. We will likely forgo the expense of a conference call once again but welcome any questions answers for which will be published here on the Flux Currents blog.
July 8, 2016
Flux – Powering Your Every Move
Greetings Flux Power stakeholders,
As the summer kicks in, I thought I would take this moment to update you on the progress we are making at Flux Power.
The sales team and I have been on the road meeting with members of our national battery and forklift ecosystem including distributors, dealers and end-users as we completed our fiscal year 2016 and enter fiscal 2017 beginning July 1, 2016.
Everyone we meet with shares our enthusiasm for our newly launched UL 2271 Listed LiFT Pack line for walkie pallet jacks. The financial and performance benefits of this cutting edge technology are clear and our lithium packs are also a great way to support ‘green’ technology.
These are some of the reasons Flux is securing repeat orders from large enterprise customers including some of the most vocal supporters of the lithium revolution that is beginning to sweep the motive power industry.
Our core group of customers has always included global beverage producers, national grocers and those involved in the food service arena among others, and we’re excited that another leading beverage bottler has recently signed up to start piloting our packs.
Our Flux LiFT Pack – with UL Mark proudly displayed – is no ordinary ‘black box’ and far from it! The UL stamp is an unmistakable sign of the safety and durability features we have built into our packs.
With this unparalleled product line, Flux is making good progress toward our production goal of 100 packs per month by the end of the summer. A wide array of systems and processes must be established and put in place to support an efficient ramp in our production. This takes time but is critical to our growth plans and trajectory. From the 100 pack per month goal, we look to further ramp production to 200 units per month by calendar year-end 2016.
The good news is that demand seems very solidly established – including an order backlog of over 100 units. The downside is that there are not short cuts to ramping production – so we are moving that process as quickly as possible to meet our production goals.
From Warehouses …. to Airports
Concurrent with our LiFT Pack progress, the airline industry is also getting an initial taste of the future of motive power as Flux completes our first pilot of a lithium-ion ‘Airport Pack’ storage solution that powers aviation ground support equipment.
The first pilot program with a leading national airline at Los Angeles International Airport (LAX) has been progressing very well over the first two months, and there is less than a month left in this initial pilot. LAX is also expected to be the site of a second Airport Pack pilot program with another national carrier.
In keeping with the industry norm, we chose white as the color for this pack. It’s not the look but the performance of our packs that really stands out when compared with the incumbent power source: lead-acid storage. Airports and airlines stand to benefit from the very same improvements in charging, performance and lifespan that lead to substantial cost savings and improved efficiency.
The Airport market offers a substantial new opportunity for Flux with a base price of approximately $20,000 and an estimated 10,000 pieces of equipment that could use this better performing technology.
In Summary – Bringing Better Power to the People
Flux is focused on the multi-billion dollar opportunity to bring our lithium technology to industrial applications that are currently mired in decades-old lead acid technology (and we haven’t yet mentioned safety or the environmental benefits.)
Currently, as you can see, our efforts are centered on material handling vehicle applications such as forklifts. Our fundamental value proposition is combining our technical and design expertise along with our battery management system software and circuitry and other proprietary technology, to develop lithium cells that deliver better performance at a lower total cost.
Part of the challenge is to fit the specifications of each piece of equipment. The current Flux LiFT Pack line in use today is very modular and scalable. It’s that technology platform that we find particularly exciting about the future for Flux.
Our core system can be tailored to a number of sectors in the industrial equipment market – a market that is just starting to awaken to the benefits of a new age of power.
Thank you for your support and interest; please help us spread the word that “the lithium is coming!”
Have a great summer!
Flux Power CEO
February 29, 2016
1. Congratulations on UL Listing. What is the revenue opportunity going forward for your UL LiFT Packs?
A: First off, the significance of the UL Listing cannot be understated for we have emerged from an intensive six month process with a substantially enhanced product, that is now the first-ever UL 2271 listed lithium-Ion battery on the market.
The UL listing confirms to all customers that our packs have been rigorously tested and meet the highest industry standards for safety. This validation, combined with OEM approvals for LIFT Packs designed in 2014, our growing industry reputation and the very clear performance and cost of ownership benefits of lithium vs. lead acid should provide a powerful stimulus to our sales and marketing efforts when we initiate commercial shipments this spring.
As for the revenue opportunity, the total addressable market for walkie pallet jack forklifts is approximately $400 million, and that’s really just the entry level opportunity in the overall forklift market which we believe is $1 – $2 billion in total potential. So, there is plenty of opportunity for our company in just this first target market, and pursuing the balance of the opportunity is very much our objective going forward.
Near term, we believe that Flux is well positioned to achieve revenues of between $3 million and $6 million in the first 12 full months of the UL Listed LiFT Pack commercialization. And we look to begin shipping UL Listed LiFT Packs in our fourth quarter ending June 2016. The first few million dollars in sales are the hardest, so from there we think revenue could scale even faster as there will be a growing base of visibility and technology corroboration – from some of the biggest names in beverages, food and grocery, and other logistics-intensive industries.
A key factor in our future revenue performance is our ability to access capital to properly fund our business. We have become very good at moving the business along with limited capital via modest draw-downs on our credit line, but to achieve the sorts of sales targets I just referenced, we’re going to need additional capital. We’ve been working on this effort for some time and are optimistic that our UL listing and the near-term launch of that line allow us to close on some growth capital on terms that are favorable for our shareholders.
2. What are you doing on the pricing and margin front with your new UL Listed LiFT Pack Line?
A: The simple answer is that we have a very clear plan for building our gross margin in this product line, and we do intend to shift pricing into better alignment with the substantially increased value of our UL packs. The hard part is to predict the timing of our margin enhancements as they depend on a range of factors including the status of our funding and our production volumes. We have identified a range of design enhancements, component and procurement changes and volume economies of scale aimed at achieving a solid and sustainable gross margin of 30% or more. It will take time to implement all of these initiatives, but the good news is that we do have a very clear and achievable plan to get there that is linked to additional funding.
As I said, we do plan on some pricing increases to reflect the quality and durability of our LiFT Packs. However, as we remain in the launch stage of our product, we plan to be as aggressive as possible on pricing and discounts, to make initial sales and trials as attractive as possible. What we’ve found is that once you can get a customer to try our lithium packs, they quickly recognize the benefits and in 80% + of the cases, they really want the solution. Our job is to help facilitate the initial purchases so that we can overcome the normal institutional reservations around buying a new product from a new vendor. So combined with progress on the costs of goods sold, we also see pricing moves that should get us to the economics that make sense for this kind of business.
As capital sourcing is very hard to predict, particularly in the very challenging microcap market of the past few months, we have developed a few different business plans that are based on differing levels of investment. The more capital we can secure, the more rapidly we can move on building out the business but with greater near term operating expense, that raises the cash flow breakeven hurdle. And in the worst case, if we are compelled to operate in a more lean fashion, we have experience running a very lean organization to keep our use of cash in line with our resources.
3. How much sales do you estimate you will need each quarter to break even on a cash flow basis?
A: That’s a difficult question to answer this early in the business as it depends on a range of factors including to what extent we have been able to fully implement our margin enhancement programs. As I mentioned, we have different models for the business that are based on differing levels of investment – the more capital, the more rapidly we can move in building out the business – and the greater the operating expense required and therefore the higher the cash flow breakeven hurdle.
It may be counter intuitive, but I do think Flux’s best chance at building a very large and successful company are rooted in higher levels of spending that will push out breakeven further into the future. While we might be able to hunker down and work to cash flow breakeven sooner, by limiting the capital nourishment of he firm – we’ll be limiting its growth and increasing the potential for other players to enter the market and become formidable competitors.
We have a fabulous opportunity to exploit our leadership position in lithium batteries for forklifts, and it is the Board’s preference to source more capital, sooner to allow us to move as quickly as possible to convert our customer relationships and product leadership into a powerful franchise.
Currently, our ongoing operating expenses have averaged $550,000 per quarter on a cash basis over the past two quarters, so to get to cash flow breakeven at this level we need to generate revenue of about $700,000 per month at a 25% gross margin. Of course gross margin is a key factor in this equation and so we need to move as quickly as possible to get into a favorable position there.
Certainly, our preference is to have the capital to really ramp all aspects of the business sooner than later. While that will negatively affect cash flow and profitability near term, it gives us the best opportunity to ramp sales, take market share and solidify Flux’s leadership in the market – all of which provide the greatest potential to drive shareholder value.
4. How much additional financing over what time period will you need to reach break even?
A. We have a few different plans based on different levels of investment. At a base level, we’d like to secure $2-3M in additional capital but on the high end we have a plan that utilizes $5M over the next 12-18 months. The funding is targeted both for supporting a rapid ramp in inventory and receivables as well as additions to our team to enhance operations, R&D and Sales and Marketing.
5. What other business opportunities are you considering in addition to Walkie pallet jacks?
A: We have several different initiatives underway however our resources are principally focused on our Walkie pallet jack line. We expect to modify our line of LiFT Packs to power End Rider pallet jacks (still in development) in the coming months to incorporate design enhancements from our UL listing effort. End Riders are larger, heavier and more powerful than Walkies, requiring a more robust energy storage solution. Flux has been working on a development model for an End Rider packs for the last year and choose to move cautiously and responsibly to make sure we met our internal demands for quality control.
In addition to forklift opportunities, we are working with a key supplier to the airline industry that sells lead-acid batteries and other equipment to multiple national carriers. One major airline carrier in particular has asked this supplier for an alternative solution to lead-acid and Flux is therefore finishing design of a lithium-based solution for airline ground support equipment and baggage carriers. In coordination with this trusted supplier to the airline industry, we expect to deliver beta units for piloting in the next few months. It’s difficult to predict but early indications are that a lithium battery solution as an alternative to lead-acid may be well received by multiple national airline carriers for certain applications.
Beyond these nearer-term opportunities, we can expand on previously developed storage solutions for robotic mining equipment, solar storage for military or commercial use, and portable power sources for remote use in a variety of applications, principally as a replacement for portable generators.
6. Can you comment on costs in Q2 related to customer service and warranty issues?
A: Certainly. We have invested significant resources in supporting our current customer relationships and addressing performance issues with certain packs. As in all technologies, the first generation product helps you identify design issues that need to be corrected in subsequent product versions. We have a better understanding of the truly punishing conditions to which our LiFT Packs are subjected, which are unlike most other battery applications. These vehicles operate without any suspension or air-filled tires, creating very harsh conditions for our Battery Management System (BMS) circuit boards, which we have addressed through a number of design and vendor changes. We feel we have most of these challenges well addressed and that belief was confirmed by the very rigorous UL testing that included aggressive vibration testing on three different planes (the x, y & z axis).
Given my career experience working with very large companies like Ford and DHL, I understand the incredible importance of customer support and so when there is an issue with a customer, particularly the very large organizations that have purchased or are piloting our batteries, we need to resolve it promptly, at whatever cost. This dynamic has also caused us to move more slowly with each customer, as we don’t want to ship a large quantity of units, only then to identify a quality issue. Commitments to our customers will not be compromised.
Through our responsiveness to customer issues, I feel we have been able to establish solid relationships that position us well for the launch of our second generation UL Listed LiFT Packs.
Fortunately, most of the issues we have faced with our products and warranty issues relate to design and production launch issues that we feel were well addressed in the UL process. So we are very confident about the reliability and performance of what is really our second-generation technology. Importantly, Flux is probably the only company to work on these challenges and certainly the only one to develop a pack to meet UL’s rigorous testing.
We are very grateful to our first customers for deployment or trial of our packs and now we are in a position to deliver a solution that incorporates the feedback we have garnered from each of their experiences with our product.
7. Why has the forklift industry failed to adopt the next generation battery storage solutions that have been fueling the mobile device and automotive industry? What makes you feel they are ready and willing to make the change from lead-acid? How do you unseat the incumbent lead-acid providers and infrastructure?
A: First off, forklift customers are without question eager to try alternatives to lead-acid power due to a variety of limitations and general dissatisfaction with that incumbent technology. They are anxious to find a better solution but have moved cautiously the last few years due to some level of disappointment with alternative sources of motive power that were introduced prematurely. The discontent with lead acid however, plays right into the value proposition of our LIFT Packs. There has not been a compelling or viable alternative to lead-acid until very recently so the status quo has remained with lead-acid owning the market. With no other solutions, I think companies have just put up with the costs and performance limitations of lead-acid because they had no other choice. These lead acid markets are very mature and are viewed, I believe, as commodity products that have sales and marketing structures based on promoting customer relationships rather than innovative and disruptive products.
The arrival of new battery technologies has been focused on markets where their capabilities have enabled new products and markets. The technology was integral to the creation of new revenue streams – not as a replacement alternative for a market that is already spoken for, and for that reason it became the first point of focus for the capital and R&D.
The second part is now that markets for lithium power (such as mobile applications) are established or underway, the next area of opportunity was to pursue a large existing market that was utilizing an inferior solution. That is Flux’s vision; introducing our lithium solution to the forklift and materials handling market..
However, one can never underestimate the challenge of getting established industrial processes to consider something new. While from our perspective, the decision is obvious – why wouldn’t a company deploy a better technology that will improve efficiency and performance at a lower total cost over time? No one has ever lost their job for not being the first to try a new solution, whereas, that’s what happens if you do try something and it misses the mark. Large companies are risk and change averse – they move slowly and carefully and rarely jump into anything.
That is very apparent from our financial performance the past two years as we worked to break through those barriers and mindset. It requires patience and persistence, and you have to listen well to the customer to identify those who could be early adopters vs. those who are not.
We’ve invested a lot of time getting to understand the thinking of the 30 national companies who have either purchased or piloted our LiFT Packs and help them understand our value proposition. This cohort doesn’t include the dozens of regional end-users who are evaluating our pack technology. As a result of our intense outreach with the help of dealers and distributors, we’ve planted the seed from which a large-scale technology conversion can take place. We need to continue to tread carefully and remain very focused on each customer’s experience and needs. If we do that, we feel certain that there is enormous deployment potential for our solutions.
And why do we think they will make the move? Logistics intensive businesses – such as food or beverages – have enormous supply chains that they have worked to optimize over the years. Flux can now offer them a clear way to reduce cost while also enhancing the efficiency and productivity of the teams and their fixed assets.
This is a concept that is at the top of the list of their materials handling management – because the benefits are clear and real and even if they don’t want to try a new technology, the fear of competition will push them in our direction as they can’t afford to pass over the same cost and efficiency benefits as their competition.
Outside of just our opinion, I can tell you countless stories of forklift drivers and logistics managers that just love our product. They even fight over who gets to use the lithium pack – because the performance is significantly better and the workflow is far more streamlined.
These benefits versus current lead acid packs include:
- Opportunity charging during breaks
- No required post-charging cool-down period – which can be as much as 8 hours for lead acid. So a Flux battery can operate two of three shifts per day compared with only one for lead acid.
- No requirement for a charging room or special ventilation for lead acid
- Virtually no maintenance and definitely no need for personnel to monitor and manage water levels in lead acid.
- Our LiFT Packs have built-in chargers that let you charge them anywhere, without removing them from the forklift, whereas lead-acid batteries – which weigh at least 500 pounds, are normally removed from the vehicle and replaced with a recently charged battery.
- Our LiFT Packs last 5-7 years versus 18 months to 2 years for most lead acid, so you spend less time on procurement activity
- While our packs cost more initially, their longer life, improved performance and limited maintenance yield a lower total cost over many years than the cost of several lead acid batteries over the same period.
Bottom line – better performance at a lower cost and with enhanced safety and environmental issues make Lithium-ion energy storage a clearly superior solution – one we feel very confident will displace much or all of the market over time. It’s our job to make that happen and happen quickly.
Thank you for the questions and the interest in Flux Power.
Flux Power CEO
October 23, 2015
1. What’s involved in the UL listing process and how confident is Flux in achieving this certification?
A: UL operates under its own authority as an independent, not-for-profit, nongovernmental organization. To establish certification, samples of a product submitted by manufacturers for certification are tested and evaluated. If UL decides the product fulfills all applicable requirements it authorizes the manufacturer to apply a certification mark to production of the samples submitted, or issues a certificate or notification that the product is now certified by UL. Flux is very confident that LiFT Packs will achieve UL Listing because our packs were initially designed to meet UL standards.
2. What is your strategy and plan to initiate larger scale deployments from existing customers that have made modest initial LiFT Pack purchases? How does UL fit into that strategy and what sort of pace can we expect to see for ramping sales?
A: The plan to increase sales to existing customers who have made modest purchases to date hinges on exceptional customer service. Proactively addressing any customer concerns and questions is the best way to ensure repeat and future large scale ordering. The OEM’s and battery dealers with whom we partner are crucial advocates for additional after-market service of Flux packs. We are forever articulating the LiFT Pack value proposition over alternative power sources for materials handling equipment in terms of runtime, performance and total cost of ownership. Prominent customers have suggested to Flux that the only hurdle to large scale ordering is the existence of a UL Mark on Flux LiFT Packs. As previously indicated, Flux expects to conclude the process with UL in Q2 ’16, and we expect significant, increased ordering in the beginning of the calendar year 2016.
3. What is it going to take to get the Flux stock price moving? What can management do to position Flux shares for appreciation?
A: The share price of Flux stock will respond positively to news of LiFT Pack sales growth. Management expects to keep investors informed of large scale customer orders in addition to reporting quarterly results that include details on the number units sold. The materials handling battery market is a multi-billion dollar opportunity each year. Flux can capture a larger share of the market for LiFT Packs by leveraging and expanding the same things that got us in this position as first mover; engineering acumen, customer service and advancing our reputation for reliability.