FLUX POWER HOLDINGS, INC. (OTCMKTS:FLUX) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.
Flux Power Holdings, Inc. (the “Registrant”) and its wholly-owned subsidiary, Flux Power, Inc. (the “Company”, and together with the Registrant, the “Seller”), entered into a Factoring Agreement (the “Factoring Agreement”) dated August 23, 2019, with CSNK Working Capital Finance Corp. d/b/a Bay View Funding (“Buyer”) for a factoring facility under which Buyer will, from time to time, buy approved receivables from the Seller. The factoring facility provides for the Seller to have access to the lesser of (i) $3 million (“Maximum Credit”) or (ii) the sum of all undisputed receivables purchased by Buyer multiplied by the 90% (which percentages may be adjusted by Buyer in its sole discretion). Upon receipt of any advance, Seller will have sold and assigned all of its rights in such receivables and all proceeds thereof. The factoring facility is secured by the Seller’s accounts, equipment, inventory, financial assets, chattel paper, electronic chattel paper, letters of credit, letters of credit rights, general intangibles, investment property, deposit accounts, documents, instruments, supporting obligations, commercial tort claims, the reserve, motor vehicles, all books, records, files and computer data relating to the foregoing, and all proceeds of the foregoing.
Seller is required to pay Buyer a facility fee of 1.0% of the Maximum Credit upon execution of the Factoring Agreement and a factoring fee of 0.75% of the face value of purchased receivables for 1st 30-days such receivables are outstanding after purchase and 0.35% for each 15-days thereafter until the receivables are repaid in full or otherwise repurchased by Seller or otherwise written off by Buyer. In addition, Seller is required to pay financing fees on the outstanding advances equal to a floating rate per annum equal to the Prime + 2.0% (8.0% floor). In the event, the aggregate factoring fee and financing fee is less than 0.5% of the Maximum Credit in any one month, Seller will pay Buyer the difference for such month. Buyer has the right to demand repayment of any purchased receivables which remain unpaid for 90-days after purchase or with respect to which any account debtor asserts a dispute.
The factoring facility is for an initial term of twelve months and will renew on a year to year basis thereafter, unless terminated in accordance with the Factoring Agreement. Seller may terminate the Factoring Agreement at any time upon 60 days prior written notice and payment to Buyer of an early termination fee equal to 0.5% of the Maximum Credit multiplied by the number of months remaining in the current term.
The foregoing description of the terms of the Factoring Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Factoring Agreement, a copy of which is filed hereto as Exhibit 10.1, and is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information disclosed in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.
Item 9.01 Financial Statements and Exhibits
Flux Power Holdings, Inc. Exhibit
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About FLUX POWER HOLDINGS, INC. (OTCMKTS:FLUX)
Flux Power Holdings, Inc., designs, develops and sells rechargeable advanced lithium-ion batteries for industrial uses, including UL 2771 Listed lithium-ion LiFT Pack forklift batteries. The Company offers a high power battery cell management system (BMS). Its BMS provides three functions to its battery systems: cell balancing, performed by adjusting the capacity of each cell in a storage system according to temperature, voltage, and internal impedance metrics; monitoring, performed by way of a physical connection to individual cells for monitoring voltage and performing calculations from basic metrics to determine remaining capacity and internal impedance, and error reporting, performed by analyzing data from monitoring each individual cell and making decisions on whether the individual cell or the system is operating out of normal specifications. Using its battery management technology, it offers integrated energy storage solutions or custom modular standalone systems to its clients.
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