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Flux Power Holdings , Inc. (NASDAQ:FLUX), a $33.3 million market cap company that has seen its stock surge over 25% year-to-date according to InvestingPro data, announced Monday that it has entered into a Securities Purchase Agreement with certain accredited investors for an initial aggregate amount of approximately $2.9 million. The company, which InvestingPro analysis suggests is currently undervalued, is seeking to strengthen its financial position amid challenging market conditions. The agreement, dated Friday, allows the company to sell up to $5 million in prefunded warrants at a purchase price of $19.369 per warrant.
Each prefunded warrant gives the holder the right to purchase shares of Flux Power’s Series A Convertible Preferred Stock at $0.001 per share. Purchasers will also receive a five-year warrant to buy a number of shares of common stock equal to 50% of the number of shares issuable upon conversion of the Series A Preferred Stock. The exercise price for these common warrants will be set at the 20-day volume weighted average price (VWAP) of Flux Power’s common stock immediately prior to the closing, and the warrants will be exercisable immediately upon issuance.
The purchase price for the prefunded warrants may be paid in cash or through the cancellation of existing debt. Flux Power stated that the net proceeds from the private placement will be used for general corporate purposes and growth capital. This financing comes at a crucial time, as InvestingPro data shows the company’s current ratio stands at 0.8, indicating its short-term obligations exceed its liquid assets. With trailing twelve-month revenue of $63.07 million and EBITDA of -$5.07 million, the company is actively working to improve its financial position.
The closing of the private placement is subject to customary conditions, including approval by a majority of the company’s common shareholders to amend its articles of incorporation. The proposed amendments include increasing the number of authorized preferred shares from 500,000 to 3,000,000, authorizing the issuance of blank check preferred stock, and creating the Series A Preferred Stock with specific rights and preferences.
The Series A Preferred Stock will carry a right to convert into common stock at an initial conversion price equal to 120% of the 20-day VWAP before closing, with automatic conversion under certain conditions or after five years. Holders will be entitled to one vote per share, cumulative cash dividends at an annual rate of 8%, and a liquidation preference equal to the original purchase price plus any unpaid dividends. The conversion price is subject to standard anti-dilution protections.
The securities will be issued in a private placement exempt from registration under Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D. This information is based on a press release statement included in the company’s SEC filing.
In other recent news, Flux Power Holdings announced a significant development with a $2 million order from a major U.S. airline for its redesigned G80-420 lithium-ion battery packs. This order, secured through the company’s partner Averest, will be delivered throughout 2025 and is intended for use in airport ground support equipment. The G80-420 battery packs feature modular architecture and embedded telematics for real-time insights and maintenance alerts. Additionally, H.C. Wainwright has maintained its Buy rating for Flux Power Holdings, setting a price target of $8.00, following the company’s third fiscal quarter results. The company reported a revenue increase of 16% year-over-year, reaching $16.7 million, with a gross profit of $5.3 million, marking an improvement from the previous year’s gross profit margin. Despite these gains, Flux Power’s operating expenses rose slightly to $6.9 million, and the company reported a net loss of $1.9 million for the quarter. The financial results also highlighted an adjusted EBITDA loss of $1.1 million, an improvement from the previous year’s loss. Ending the third fiscal quarter, Flux Power had approximately $0.5 million in cash and access to more than $6 million from credit facilities.
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