Item 3.02 Unregistered Sales of Equity Securities.
As previously reported, on August 31, 2020, Flux Power, Inc. ("Flux"), a
wholly-owned subsidiary of Flux Power Holdings, Inc. (the "Registrant"), entered
into the Third Amended and Restated Credit Facility Agreement ("Restated Credit
Facility Agreement") with Esenjay Investments, LLC ("Esenjay"), Cleveland
Capital, L.P. ("Cleveland"), and other lenders (the "Lenders" or the "Lender")
in connection with its line of credit for $12,000,000 ("LOC") to (i) extend the
maturity date of their respective secured promissory note to September 30, 2021,
and (ii) consolidate outstanding obligations of $564,271, consisting of $500,000
in principal and $64,271 in accrued interest, under the Amended and Restated
Convertible Promissory Note dated March 9, 2020, as amended on June 2, 2020,
issued by the Flux to Esenjay (the "Esenjay Note") into the advances under the
LOC (the "Amendments"). To reflect the Amendments, Esenjay was issued a Second
Amended and Restated Secured Promissory Note ("Restated Esenjay Note"), and
other Lenders were also issued an amended and restated secured promissory note
("Restated Lender Note") on August 31, 2020. The Restated Esenjay Note contains
a voluntary conversion mechanism whereby Esenjay may convert in whole or in
part, the outstanding principal and interest under the Restated Esenjay Note
into shares of the common stock of the Registrant at a fixed conversion price of
$4.00 per share (the "Conversion Shares").
On March 26, 2021, Esenjay fully converted $1,044,535.18 outstanding under the
Restated Esenjay Note, which consists of $883,746.04 in principal and
$160,789.14 in accrued interest, for an aggregate of 261,133 shares of common
stock of the Registrant at $4.00 per share (the "Conversion"). As a result of
the Conversion and as of March 26, 2021, there is no principal balance
outstanding under the Restated Esenjay Note.
Esenjay is a major shareholder of the Registrant (beneficially owning
approximately 35.7% of the outstanding shares of common stock of the Registrant
as of March 30, 2021). Michael Johnson, a current member of the Registrant's
board of directors, is the sole director and beneficial owner of Esenjay.
The Conversion Shares were issued without registration under the Securities Act
of 1933, as amended (the "Securities Act") in reliance on the exemptions
provided by Section 4(a)(2) of the Securities Act.
The summary of the Restated Credit Facility Agreement, the Restated Security
Agreement, the Restated Esenjay Note, and the Lender Note does not purport to be
complete and is qualified in its entirety by the terms and conditions of the
Restated Credit Facility Agreement, the Restated Esenjay Note, and the Restated
Lender Note. Copies of the Restated Credit Facility Agreement, the Restated
Security Agreement, the Restated Esenjay Note, and the Restated Lender Note were
previously filed as Exhibits 10.1, 10.2, 10.3, and 10.4 to the Registrant's
Current Report on Form 8-K, filed with the SEC on September 4, 2020 and
incorporated herein by reference.
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