Flux Power Defaults on Loan Covenant, Faces Immediate Debt Repayment Risk

summarizeSummary

Flux Power Holdings, Inc. has defaulted on a loan covenant, putting approximately $6.5 million in outstanding debt at risk of immediate repayment and intensifying its previously disclosed going concern doubts.

check_boxKey Events

• Loan Covenant Default

  Flux Power Holdings, Inc. failed to comply with the minimum EBITDA financial covenant for the trailing three-month period ended March 31, 2026, under its Loan and Security Agreement with Gibraltar Business Capital, LLC.

• Event of Default Triggered

  This failure constitutes an 'Event of Default' under the Loan Agreement, allowing the lender to declare all obligations immediately due and payable.

• Significant Debt at Risk

  Approximately $6.5 million in outstanding debt under the Loan Agreement is now at risk of being called by the lender.

• Negotiations Underway

  The company is working with GBC to negotiate an amendment or waiver, and currently retains access to its line of credit, though this can be limited at any time.

auto_awesomeAnalysis

Flux Power Holdings, Inc. has disclosed an Event of Default under its Loan and Security Agreement with Gibraltar Business Capital, LLC (GBC) due to failing to meet a minimum EBITDA financial covenant for the period ended March 31, 2026. This is a critical development, as the company previously reported substantial doubt about its ability to continue as a going concern due to an impending breach. The outstanding balance of approximately $6.5 million, representing a significant portion of the company's market capitalization, could be declared immediately due and payable by GBC. While the company is negotiating an amendment or waiver and currently retains access to its credit line, there is no assurance of a favorable outcome. This event significantly escalates the company's financial distress and poses a severe threat to its liquidity and operations. The concurrent prospectus supplement for the resale of shares by existing stockholders further highlights the company's inability to raise capital directly from equity issuance at this critical juncture.