Flux Power amends loan agreement, adjusts EBITDA covenant

Flux Power Holdings , Inc. (NASDAQ:FLUX), a provider of advanced lithium-ion energy storage solutions with annual revenue of $63.85 million, has entered into an amendment to its existing loan agreement with Gibraltar Business Capital, LLC, according to a recent SEC filing.

The amendment, which modifies the EBITDA Minimum financial covenant, was executed on January 22, 2025. According to InvestingPro data, the company reported negative EBITDA of $4.35 million in the last twelve months, highlighting the significance of this covenant modification.

The company, which operates through its subsidiary Flux Power, Inc., agreed to the terms of the Fourth Amendment to the Loan and Security Agreement originally dated July 28, 2023. As part of the amendment, Flux Power consented to pay a non-refundable amendment fee totaling $50,000. The fee is to be paid in two equal installments, with the first due on March 1, 2025, and the second on April 1, 2025.

The specifics of the amendment were not fully detailed in the press release statement. However, such adjustments typically relate to the financial metrics that the company must maintain to comply with the terms of the loan. These covenants are often used by lenders as a measure of financial health to ensure that the borrowing company remains capable of meeting its obligations.

InvestingPro analysis reveals that Flux Power maintains a current ratio of 1.1 and carries total debt of $16.17 million, with one key InvestingPro Tip indicating potential challenges with interest payments. Subscribers can access 10+ additional ProTips and comprehensive financial analysis through the platform.

The amendment signifies an ongoing relationship between Flux Power and Gibraltar Business Capital, suggesting a mutual agreement on the terms that govern the company’s financial obligations. It is not uncommon for businesses to negotiate amendments to loan agreements, either to reflect changes in their financial situation or to accommodate shifts in the broader economic environment.

In other recent news, Flux Power Holdings has been facing several noteworthy developments. The company recently announced a change in its independent accounting firm from Baker Tilly US, LLP to Haskell & White LLP. This comes after Flux Power disclosed material weaknesses in internal control over financial reporting and a negative EBITDA of $4.35 million.

The company has also appointed Kelly Frey as its new Chief Revenue Officer. Frey’s appointment is part of the company’s efforts to drive business growth, with a solid pipeline of orders and new customer opportunities. Flux Power’s recent revenue was reported at $63.85 million, with a net loss of $2.6 million in the third quarter of fiscal year 2024.

In addition, Flux Power is undergoing financial restatements due to noncash inventory write-downs and related adjustments, totaling approximately $4.9 million. The company has also been notified by the Nasdaq Stock Market of non-compliance with its listing rules due to delayed filing of its required quarterly and annual reports with the SEC.

On a positive note, Flux Power has announced a strategic partnership with a leading forklift original equipment manufacturer to introduce a new private label battery program.

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