welcome back to our second installment of the powertrain updates

Hello

Welcome to the second installment of the FluxWorks Powertrain newsletter. If you're new to our journey, we’re thrilled to have you on board. For those looking to catch up, our first newsletter is available in the archives. The second half of 2024 has been a significant gear shift for the company marked by exciting traction and growth. However, as with any journey, we’ve faced some challenges along the way, and we’re working hard to overcome them. We appreciate your support as we continue to power forward!

personal metrics

FluxWorks is a mechatronics company building magnetic gears, actuators, and sensors for robotics, automation, and space. Our tech was born for space but priced for robotics & automation. We deliver enabling motion solutions that:

• 12 Under 12: Texas A&M young alumni achievement recognition.
• 30 Under 30: Forbes North America Class of 2025 Manufacturing & Industry.
• 30 x 32: My waist size and inseam length. boundaries through active stiffness, dampening, and backdrivability control capabilities

key metrics

Our first PO for the MGC-series gear was placed in June, and since then, we've made several sales, including MGX and MG2 prototype units—breakdown below. With these early sales, we refined our pricing strategy and achieved our first profitable sale in December to MDA Space, starting our 2025 resolution of "charging a profitable price" early.

Now securing four contracts for the same MGC-S-100 base model, we’ve reduced COGS by over 50% through standardization and simplified designs. Our Q4 efforts revealed that we can halve COGS again at 10,000 units/year while keeping manufacturing and supply chains onshore and secure 🇺🇸

We’re getting feedback from our June and August sales: the MGC-series gear is a hit, exciting customers for future iterations - our first customer has even made referrals. However, the first MGX sale fell short, leading that customer as well as DoD stakeholders to eye the less mature MGA gear—the axial flux variant of MGX.

As the New Year begins, we're focused on commercializing the MGC-series in robotics and advanced manufacturing, which accounts for over half of our sales revenue and 67% of qualified leads. New additions to the pipeline include Apptronik spinoff Elevate Robotics, Intuitive Machines, and Tetra Pak. The FluxSense™ innovation, created last Summer, has further excited roboticists about the MGC-series' potential—in fact, it’s what led to our first sale in June.

why fluxsense™ makes sense for automation

A magnetic gear paired with a motor acts like a series elastic actuator—a surprising holiday gift we didn’t expect. During my Ph.D., I saw the springiness of magnetic gears as a problem and spent years trying to stiffen them.

Turns out, roboticists say it's sometimes better to loosen up and be a little more flexible so long as you can control it. My friends tell me the same thing 🙃

FluxSense™ is an affordable hardware + microprocessor combo that uses a patent-pending method to measure speed and temperature for precise torque calculation. Our magnetic gear + sensor setup handles extreme environments and cuts cost compared to traditional mechanical gear + position sensor + torque sensor combos in certain precision motion applications.

Rob Ambrose, world renowned roboticist, bought the MGC gear pictured with the sensor hardware for evaluation in June and, after his testing, we’re thrilled he is open to round two of development. NASA supports the same for Texas Space Commission funding, and MDA Space has expressed intent for follow-on purchase after successful evaluation.

We’ve built an internal GUI to visualize our sensor-integrated smart gear feedback—now we’re focused on refining it into a market-ready product with our sights set on a gear + sensor + software commercial pilot tester in 2025 🤖

The image below showcases example applications for our smart gears:

1. Robotic rotary joint actuators handling delicate electronics for packaging.
2. Hygienic servo motor series gearheads (e.g., ice cream processing or pharmaceuticals manufacturing machinery).
3. Dexterous robotic end effectors in space Rendezvous, Proximity Operations, and Docking (RPOD) applications.
4. Rotary axes in automated wafer-loading devices.

We specialize in concentric gears with integrated position and torque sensing—ideal for high-end uses and Industry 4.0, not consumer products. Look up competitors cynapse® by WITTENSTEIN alpha, GEORGII KOBOLD, or maxon group for additional inspiration on relevant applications🧐

We’re finalizing designs for five standard sizes and updating our website with brochures for these gears, FluxSense™ and our Industrial Internet of Things (IIoT) software in February after more customer feedback. If you know companies that could benefit from our MGC gear with integrated torque and position sensing, please connect us 🤙.

learnings since last update

While the MGA-series gear shows potential for military propulsion and MGX-pipeline customers are open to exploring MGA, we’re focusing on winning new MGC + FluxSense™ customers and fulfilling current contracts in the near term. After all,

• MGC + FluxSense™ is gaining traction with positive feedback & minor changes👌
• Scaling MGA would require more funding (facilities would require larger upgrades).
• The MGA-series gear a technically less mature product.

We’ve also reduced the time to convert prospects into contracts. Formerly 9 months for most, we converted Blue Bell to PO in just 11 weeks. In large part that due to the reduced customer organizational red-tape, but a common theme among most of our successful customer conversions are leveraged introductions—7 of our last 9 contracts followed a path where a customer or board member of the prospect introduced us to the decision makers at the prospect. With an engineer joining me in winning commercial sales and creating a line a demo-units for customer education for our off-the-shelf products, we’re aiming to quicken prospect conversion further.

One promising opportunity is Tetra Pak, which could lead to our first double-digit unit PO in 2025, and triple digit PO in 2026, thanks to an investor intro and Blue Bell piloting our gears in a Tetra Pak machine. Shout out to Brad Jenkins for making that introduction!

fundraising — seed round

We’re in full-on fundraising mode, and yes, it’s aggressive. But my goal is to get something locked down by March. I’ve been having some ‘sneak peek’ chats with some friendlies, and things are starting to click.

Here’s my current list of conversations I’ve had (or I’m itchin’ to have with your help) 👇

If there's anyone missing from the list who you think I should get in front of, feel free to add them to the bottom, and I'll reach out to coordinate an intro. If there’s someone already on the list with whom you’ve got a great relationship, DM me! The deck is still a work in progress, but feel free to take a peek here. We are focusing on identifying a lead.

I’m also in the process of building out an Invested Advisory Board to help us tackle the next chapter of commercializing our smart gearbox. Since the Insider Round, I’m excited to announce that Ross Guieb and Al White have joined as invested advisors. Big things ahead!

team

Our growth this year is thanks to Kyle Maier, our Director of Operations, who joined in late 2023 to spearhead Operations, Capacity Planning, and Execution. His leadership in holding the team accountable and improving communication has made a huge impact.

In November, I let go of the last original team member from 2022, and the team’s momentum soared. The energy shifted as everyone embraced more ownership over their work. Being under one roof at our Conroe HQ has also sped up communication. Here’s a pic of the squad at the Thanksgiving potluck. 🦃

what i feel good about

Our grant funding has played a key role in helping us mature the processes needed to supply defense and space primes. We were honored to have representatives from Governor Greg Abbott’s office and the Texas Manufacturing Extension Center / NIST present plaques recognizing our compliance with DFARS 252.204-7019 and DFARS 252.204-7020, which became mandatory in FY25. NIST, the writer of the cybersecurity standards, published a success story on our successful achievement and collaboration with the Texas Manufacturing Extension Partnership affiliate, TMAC. Read it here. We’re also on track to complete AS9001D / ISO9001 certifications by Summer 2025, and most of the QA/QC process creation effort is funded by our newest Army SBIR.

As we continue to drive down gear cost, it could have come at the cost of being heavier. However, Gen. 1 of our inherently backlash-free MGC gear (MGC-S-100-020-FFSS) which was cost-optimized (and not weight optimized) is shown here to compete with relevant commercial mechanical cycloids, like the RDS series marketed as Near Zero Backlash Precision Gears and Reducers by Nabtesco Motion Control. Inbound R&D funding is for dual-use variants of the same gear are being developed with significantly reduced weight for our space applications, having rad-hard FluxSense™ avionics🥇

In Q4, we submitted $6.9M in R&D proposals to the U.S. Army, Space Force, and Texas Space Commission, with partners like Lockheed Martin, NASA Johnson Space Center, and the International Space Station National Lab (ISSNL) committing resources on those proposals. ISSNL has been super supportive—even posting about us on their social (see pic of me being interviewed). We expect feedback starting next month on these proposals. This funding is in addition to the $5M Phase III SBIR funding, which could unlock Technology Readiness Level 6 for gears relevant to a particular system on two armored vehicles, one of them an Army Next Generation Combat Vehicle. The $5M is not secure until the federal continuing resolution ends, likely in March.

what grinds my gears

At one of my first pitch competitions, we snagged a $10k in-kind prize from some College Station attorneys—and they ended up providing legal support through my first few hires. The employment agreement template they provided was insane, and I should have asked more questions before having my first hires sign it. Dismissing the last of the early team members has been incredible for company growth as we attract better talent, but it has also been costly 😵‍💫

To secure the $5M in congressional incentives and gear up for the Phase II Sequential our Army contact submitted on our behalf, we expanded into our pilot facility. We were initially expecting the Phase II Sequential SBIR to start in September, but now Q2 is the new target. Our burn rate has increased, so we’ll need bridge funding by April to keep things moving while we wait for non-dilutive funding to come in the door. The remainder of our Seed Round can have a rolling close through Q2 2025 for strategic followers.

what’s next

Get this round closed and the first check in the bank by the end of March.

We have to deliver on Blue Bell and MDA Space in the Spring. We have some minor design improvements to make for the Gen. 2 MGC based on Rob Ambrose feedback and some recent COGS cutting innovations from our team. Finally, hitting our sales targets over the next six months will require focus from myself and those engineers stepping up to support me 👯

what i need help with

Get this round closed and the first check in the bank by the end of March.

Introductions to companies that could become customers for our smart gearbox💡

Please also take a look at the list of investors we are lining up — Investor notes.

Let me know if there are people we should be talking to or if there are people already on the list you have good relationships with.

• Thank you to Col. (Ret.) Ross Guieb for the clear shoutout on the main stage at Fed Supernova 2024 – that led to many phone calls, one such already turned into business.
• Thank you, Brad Jenkins, for helping get the ball rolling on Tetra Pak intros turned into pipeline opportunities.
• Thank you, Amos McDonald, for connecting us with our now landlord and ensuring we get a fair deal, Austin Hill, Mike Bridges, Curtis Feeny for the numerous intros to vendors and prospective customers.
• Thank you, Al White, for coaching me through smart ways to inquire about BAE Systems and Army funding to roadmap our future projects, active deck feedback, and for coming to meet the team buying us all pizza this week.

Thank you for all your support 🙏

FluxWorks, 1026 Outpost Dr, Ste B1, Conroe, Texas 77304, United States, 9794310990

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