Good afternoon, and welcome to the Flux Power Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Joel Achramowicz, Managing Director. Please go ahead.

Good afternoon, and welcome to Flux Power's Fourth Quarter and Full Year Fiscal 2025 Earnings Conference Call. I'm Joel Achramowicz, Managing Director of Shelton Group, Flux Power's Investor Relations firm. And joining me today are Krishna Vanka, Flux Power's CEO; Kevin Royal, Chief Financial Officer; and Kelly Frey, Chief Revenue Officer. Before I turn the call over to Krishna, I'd like to remind our listeners that during the course of this conference call, the company will provide financial guidance, projections, comments and other forward-looking statements regarding future market developments, the future financial performance of the company, new products or other matters. These statements are subject to the risks and uncertainties that we discuss in detail in our documents filed with the SEC, specifically our 10-K and our most recent 10-Q, which identify important risk factors that could cause actual results to differ materially from those contained in the forward-looking statements. Also, the company's press release and management statements during this conference call will include discussions of certain adjusted or non-GAAP financial measures. These financial measures and related reconciliations are provided in the company's press release and related current report on Form 8-K, which can be found in the Investor Relations section of Flux Power's website at www.fluxpower.com. For those of you unable to listen to the entire call at this time, a recording will be available via webcast on the company's website. And now it's my great pleasure to turn the call over to Flux Power's CEO, Krishna Vanka. Krishna, please go ahead.

Thank you, and welcome to everyone as we review our fourth quarter and fiscal year 2025 results and business update. I have been at Flux Power now for 6 months as CEO and have had the opportunity to meet more extensively with our customers and partners. This gave me a better understanding of their business, the product requirements and how Flux Power can offer added value through our battery solutions. These discussions have made me very excited about the company's future and the opportunities that lie ahead of us. Flux Power is at the forefront of shaping the future for intelligent energy solutions where every lithium-ion battery functions as part of a connected self-optimizing network. This vision is part of a mandate shared across the members of our newly established management team, and we are all fully committed to achieving our long-term objectives, both operationally and financially. In our last earnings call, I shared with you the 5 strategic initiatives that will be guiding our execution and performance in the upcoming quarters and years. These initiatives include: number one, achieving profitable growth; number two, executing on operational efficiencies; number three, implementing a solution selling approach; number four, building the right products for customer needs; and number five, integrating value-added software across our battery portfolio to generate recurring revenue streams. As highlighted in our press release issued earlier today, we finished 2025 with a solid year-over-year growth both on a quarterly and annualized basis. We also significantly improved our gross profit and margin performance, contributing to meaningful improvement in our bottom line results. Acknowledging that we still have some work to do to achieve our goals of profitability and cash flow break-even, we are demonstrating initial progress. In support of these goals, we have implemented various operational efficiencies to further reduce…

Thank you, Krishna, and thanks, everyone, for joining us today. I'm now in my third quarter at Flux Power. And like Krishna, over the past several months, I've immersed myself in the outbound business development activities across the company. I'd like to spend just a few minutes walking you through how we're thinking about the business today and where we see opportunities and momentum building. At Flux, our top focus is on building long-term partnerships with customers, dealers and OEM sales teams. Over the last couple of quarters, we've shifted our sales approach to engage more directly with end customer users while continuing to fulfill business through OEMs, dealers and distribution partners. This is giving us better visibility into their needs and how we can deliver more value along with our dealer and OEM partners. We're not just selling a battery, we're also selling the accompany telematics software, which can be a critical component for customers to design their charging and energy management infrastructure. In fact, our SkyEMS telemetry and energy management systems for monitoring and optimizing battery performance are becoming a bigger piece of the conversation. In addition to the potential new revenue streams from our software, we're also excited about our growth opportunities in new market verticals and geographies. We're leveraging our strong foothold in the United States and targeting expanded opportunities in North and Central America, where we think Flux can play an important role. These efforts are expected to open up significant market potential to help drive future growth. Partnerships are another key driver of our growth strategy. Currently, we're engaged in more OEM discussions than at any other point in our history. We are working to remove barriers to adoption by expanding certifications, pursuing private label opportunities and investing in marketing. The goal is to turn first-time buyers into long-term repeat customers. We are also looking at partnerships beyond OEMs with telematics providers as well as energy and charging infrastructure players. We see a real opportunity to strengthen the ecosystem around our solutions and add more value for our customers. Finally, in terms of our sales pipeline, Flux has been involved in more opportunities this year and quoting activity is up significantly. And even though it may take a couple more quarters for that activity to materialize into backlog, the recent trend is very encouraging. So with that, let me now hand the call over to our CFO, Kevin Royal, to discuss our results for the quarter and year. Kevin?

Good afternoon, everyone. Revenue for the fourth quarter of 2025 was $16.7 million compared to $13.4 million during the same quarter of the prior year. Full year 2025 revenue increased to $66.4 million from $60.8 million in the prior year. Increased sales for the full year 2025 was driven by higher volume in both material handling and ground support equipment markets, higher average selling prices in the GSE market, while slightly offset by lower average selling prices in the material handling market. Gross margin in the fourth quarter was 34.5% compared to 26.8% during the same quarter of the prior year. Full year 2025 gross margin increased to 32.7% from 28.3% in the prior year. The improvement in gross margin was driven by sales of higher-margin products, the benefit of cost savings initiatives and lower warranty-related expense. Operating expenses in the fourth quarter of 2025 were $6.5 million compared to $5.4 million in the fourth quarter of 2024. Full year 2025 operating expenses increased to $26.8 million from $23.8 million in the prior year. Higher operating expenses were driven by $2.9 million of onetime costs associated with the multiyear restatement of previously issued financial statements. The net loss for the fourth quarter was $1.2 million or $0.07 per share compared to a net loss of $2.2 million or $0.13 in the fourth quarter of 2024. Net loss for the full year was $6.7 million or $0.40 per share, which includes approximately $3 million in onetime costs. This compares to a net loss of $8.3 million or $0.50 per share in 2024. Excluding onetime costs associated with the multiyear restatement of previously issued financial statements and stock-based compensation, the fourth quarter non-GAAP net loss was $30,000 or $0.00 per share compared to a non-GAAP net loss of $1.9 million or $0.11 per share in the prior period. For the full year, non-GAAP net loss was $2.8 million or $0.17 per share, which excludes onetime costs associated with the multiyear restatement of previously issued financial statements and stock-based compensation. This compares to a net loss of $6.8 million or $0.41 per share in the prior year. Adjusted EBITDA for the fourth quarter was positive $600,000 compared to negative $1.2 million in the same quarter a year ago. Full year 2025 adjusted EBITDA was a negative $0.1 million compared to a negative $4 million in the prior year. Turning to the balance sheet. We ended the quarter with cash and cash equivalents of $1.3 million compared to $600,000 a year ago. I will now turn it over to Krishna for his final remarks prior to the question-and-answer session.

Thank you, Kevin. As we highlighted today, we finished fiscal 2025 with solid year-over-year growth on both a quarterly and as well as on annualized basis. We have a refreshed leadership team here that's fully focused on executing our strategic initiatives, including implementing our solutions-based sales approach with partners and customers to increase the value we provide. Although the current tariff and macroeconomic environment create uncertainty and near-term caution to certain customers, the growth of our sales opportunities, combined with the expected benefits from our strategic initiatives gives us a reason to be increasingly optimistic for the later part of our fiscal year. With that said, I will now turn the call back over to the operator for Q&A session. Operator?

[Operator Instructions] Our first question is from Craig Irwin with ROTH Capital Partners.

It's Andrew on for Craig. First question for me. It was really nice to see the strong gross margin expansion in the quarter. Can you guys just kind of talk a little bit more about what went right in the quarter there? And you guys have also talked about near-term visibility to 40% gross margin. So kind of additional color on kind of where we are in that journey would be great.

Yes. So we've had some initiatives to improve the cost of our product input. So the components and raw materials that go into our products. Really, that's what you're seeing flow through the quarter that contribute to probably about 60% of the improvement. The other being lower warranty costs. As we continue to improve the quality of our products, we're really starting to see the number of repair incidents decline both for the full year, but especially in the fourth quarter. So both of those items contributed to the improvement that we saw in the gross profit in the quarter.

Great. Now it was great to see the progress. And second one for me before I jump back in the queue. Congrats on getting the beta rollout of SkyEMS 2.0. Can you just kind of talk about how that's -- the customers received the product so far? And maybe just remind us kind of what the upgraded product provides versus the initial rollout of SkyEMS.

Yes. So this new version, SkyEMS 2.0 is really designed with customer in mind. We work closely with both the airline industry and the material handling to understand their pain points. These are specifically related to, "Hey, let us know when it's time to charge your battery. Can you increase the efficiency of the battery charging? Can we know when [ are we ] overusing the battery when it's discharging just to warm up the vehicle," for example, in colder environments. So we took all the feedback and we improved the product. We also made it pretty light and sleek that can almost work on a mobile environment like in a browser. So this is a new product. We are very proud, as I mentioned, that we gave this to an existing airline who is testing this, gave us good feedback so far. We are also giving it to a material handling customer this week as we speak. And pretty soon, we will roll this out. And as you heard me saying, we are packaging this together when we sell the battery. That's one of the things we did earlier with the airline for $1.2 million. That solution included SkyEMS software.

Congrats on the continued progress and the strong quarter.

The next question is from Amit Dayal with H.C. Wainwright.

Congrats on all the progress. Just trying to see what the pipeline is looking like for you guys? And if you maybe have shared the backlog number, I didn't see it in the press release, I think. So any color on that would be helpful.

Yes. So specifically related to the outlook, while we don't provide guidance, we have seen kind of a bit of a slowdown and a pause from some of our customers in the quarter that we're currently in, which would be our first fiscal quarter. We've also started to see an increase in quoting activity, which we think bodes very well for the second fiscal quarter, which is the fourth calendar quarter. As it specifically relates to backlog, our current number is right at $9 million as we end the quarter.

Okay. And as you sort of look to now maybe moving from beta to actual sort of product rollout for the SkyEMS, how should we think about what the plan is on that side? And what are your expectations for the attach rate? Are you selling this independently as well? Or will this exclusively initially be sold along with the battery solutions? Just trying to get a sense of what the sort of -- at least the initial sales strategy is going to be for this offering?

Sure. I'll answer this, and then I'll have Kelly add any more color. So yes, our strategy is to package and sell the SkyEMS software along with the battery. That's why we are calling it intelligent battery. And we are seeing some good success with it as we roll this out. Beta is the name we gave it to make sure customers are happy and they will gladly use the product, but the product is literally ready with their live data. So as I mentioned, in a month or 2, we will remove the name beta from the product and call it SkyEMS 2.0, which we are already selling, as I mentioned, with every battery possible. You also probably noticed we have 28,000 units that are already in the field. Our intentions are to go back and get them on the platform as much as we can. We do have a few thousands of the batteries in the field that are already online. It's literally working with these customers, giving them access and having them pay for it, which gives us a very good upsell opportunity. With that said, Kelly, do you want to add any other color?

Sure. I think, Krishna, you nailed it, but it's really 3 motions. The first is telematics on every battery to make sure that we're positioning in it, including at least a base level of telemetry, SkyEMS with each battery. Then is going back to the installed base of customers who are maybe in their first, second, third, fourth year of having a Flux battery even longer and saying, "Hey, there could be value in you putting telemetry on this battery so you can get better visibility, which allows for better capital planning, better optimization." That's kind of the second motion. And then the third motion is once somebody takes perhaps their first version of SkyEMS, as we move [Technical Difficulty] we have upsell opportunities, perhaps advanced reporting, advanced optimization capability, integrations with other software they may be using. So it's kind of an upsell on top of the additional -- sorry, the original purchase of that telemetry.

The next question is from Rob Brown with Lake Street Capital Markets.

First question is on the airline orders that you received. I think there were 2 pretty sizable orders there. Could you give us a sense of sort of what's driving that? Is it an expansion into the fleet or really kind of the new product offerings that you've got?

So the G80-420, the $2 million is a redesigned battery. It was redesigned to be more efficient, more gross margin-driven design. So I would say it is as a new product almost that we sold to an existing airline. And the second order we mentioned is for the G lithium-ion, which is sold as a package with SkyEMS. So that's an existing product that we sold with the software added to it as a package.

Could I add something, Krishna? The other thing is -- so Krishna is accurate in that. The other thing is just to remind everybody, we're still at a very early adoption phase of lithium within the ground support equipment market. So even our existing customers who have purchased several hundred or even a couple of -- thousand of batteries from us or low thousands of batteries from us, still have a lot of migration to do from lead acid to lithium or from internal combustion to lithium. So it's not only just upselling the existing customers to get further adoption throughout their fleets, they typically roll out airport by airport by airport or sometimes by region or by country. So it's the existing increased adoption and then it's new airport acquisition is the other -- sorry, new airline acquisition is the other key focus in that market.

Great. And then on the quoting activity, I think you talked about an uptick after a bit of a lull. What's the -- is that both material handling and ground support equipment? Or what's sort of the dynamics of that improving order quoting?

Kelly, do you want to take it?

Yes, I can. So really, I think everybody on this call is aware, we service 2 main markets. There's the ground support equipment market and the material handling market. The ground support equipment market, we didn't see as much of a pullback in capital expenditures. There was a little where there was related to uncertainty with the economy, we think driven mostly by the tariffs and what was going to happen, perhaps a little downturn in passenger traffic. So there was some impact on the ground support equipment market. However, in the material handling market, we did see in particularly Q1 calendar year, there was a little bit of advanced purchasing. Let's get it before the tariffs hit. And then there was a pullback on capital expenditures. I think everybody is aware, our batteries go into lift trucks. Lift trucks are a fairly heavy capital expenditure. We saw customers kind of holding their capital tied to chest in kind of late Q1, Q2. And now that increased quoting activity is really people saying, "Okay, I think I understand what's going on with tariffs. I understand the impact on my supply chain. Okay, I'm now going to release that capital to purchase the lift trucks, purchase the batteries," et cetera. So that's really what's driving it in the material handling market.

This concludes our question-and-answer section. I'd like to turn the conference back over to Krishna Vanka for any closing remarks.

Thank you all again for joining us on the call today. We really look forward to speaking with you again during our first quarter call in November time frame. Operator, you may now disconnect.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.