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SUBSEQUENT EVENTS | 3 Months Ended
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Sep. 30, 2023
Subsequent Events [Abstract] |
SUBSEQUENT EVENTS | NOTE 9 - SUBSEQUENT EVENTS Termination of the ATM Sales Agreement On October 5, 2023, the Company terminated the Sales Agreement with HCW upon given prior written notice of termination to HCW pursuant to the terms of the Sales Agreement. 2023 Bonus Payout On October 6, 2023, the Compensation Committee of the Board (the “Compensation Committee”) and the Board approved the following cash bonuses to the following executive officers, whereby the final cash bonus payout was determined based on a payout percentage of the executive’s previous target cash bonus for fiscal year 2023: SCHEDULE OF DEFERRED COMPENSATION ARRANGEMENT WITH INDIVIDUAL
Name |  | Position |  | Target Cash Bonus |  |  | Payout Percentage |  |  | Cash Bonus Payout |
Ronald F. Dutt |  | Chief Executive Officer |  | $ | 225,000 |  |  |  | 64.7 | % |  | $ | 145,565 |
Charles Scheiwe |  | Chief Financial Officer |  | $ | 71,820 |  |  |  | 64.7 | % |  | $ | 46,464 |
Jeff Mason |  | VP of Operations |  | $ | 61,800 |  |  |  | 64.7 | % |  | $ | 39,982 |
2024 Bonus Plan On October 20, 2023, the Board approved an amended and restated annual cash bonus plan (the “Amended Annual Bonus Plan”) that was previously approved by the Board on November 5, 2020 which allows the Compensation Committee and/or the Board of the Company to set the amount of bonus each fiscal year and the performance criteria. Executive officers and all employees (other than part-time employees and temporary employees) are eligible to participate in the Amended Annual Bonus Plan (“Participants”) as long as the Participant remains an active regular employee of the Company. The Amended Annual Bonus Plan is effective for fiscal year 2024 and each fiscal year thereafter (the “Plan Year”). For each Plan Year, the Compensation Committee will establish an aggregate amount of allocable Bonus under the Amended Annual Bonus Plan and determine the performance goals applicable to a bonus during a Plan Year (the “Participation Criteria”). The Participation Criteria may differ from Participant to Participant and from bonus to bonus. All of the Company’s executive officers are eligible to participate in the Amended Annual Bonus Plan. The Amended Annual Bonus Plan was approved by the Board in anticipation of the Company adopting its “clawback” policy applicable to its executive officers as required under the Dodd-Frank Wall Street Reform and Consumer Protection Act. On October 20, 2023, pursuant to the recommendation of the Compensation Committee, the Board approved the bonus pool and performance criteria for the Amended Annual Bonus Plan for FY2024 (the “2024 Bonus”). For FY2024, the performance goals applicable to a bonus are based on the Company achieving certain targets based on the Company’s full year revenue, Adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, and stock-based compensation) for FY2024, and functional goals (the “Financial Targets”), in addition to individual performance objectives and goals (the “2024 Performance Matrix”). The Board approved the following cash bonuses under the 2024 Bonus for the following executive officers: SCHEDULE OF DEFERRED COMPENSATION ARRANGEMENT WITH INDIVIDUAL
Name |  | Position |  | Maximum Payout(1) |  |  | Special Bonus Maximum Payout(2) |
Ronald F. Dutt |  | Chief Executive Officer |  | $ | 256,281 |  |  | $ | 400,000 |
Charles Scheiwe |  | Chief Financial Officer |  | $ | 91,571 |  |  | $ | - |
Jeffrey Mason |  | Vice President of Operations |  | $ | 94,607 |  |  | $ | 400,000 |
(1) | Full maximum payout assuming targets reached as set forth in the 2024 Performance Matrix.
(2) | Full maximum payout for achieving certain additional gross margin targets.
Grant of Stock Options On October 20, 2023 (the “Grant Date”), pursuant to the recommendation of the Compensation Committee, the Board approved the grant of stock options (the “Options”) under the Company’s 2014 Equity Incentive Plan (the “2014 Plan”) and the Company’s 2021 Equity Incentive Plan (the “2021 Plan” and together with 2014 Plan, the “Plan”) to certain employees of the Company or its subsidiary, Flux Power, Inc. The Options are subject to the terms and conditions provided in the form of the related Incentive Stock Option Agreement under the 2014 Plan (the “2014 Option Agreement”) or the form of Incentive Stock Option Agreement under the 2021 Plan (the “2021 Option Agreement”). The Options have an exercise price of $3.36, which is based on the Company’s 10-day volume weighted average price for the ten (10) trading days ending on the Grant Date, and will expire ten (10) years from the Grant Date. The following executive officers of the Company were granted Options in such number, with such vesting schedule, and under the respective Plan, set forth as follows: SCHEDULE OF DEFERRED COMPENSATION ARRANGEMENT WITH INDIVIDUAL, SHARE BASED COMPENSATION
Name |  | Position |  | Options(1) |  |  | Plan |  | Vesting Schedule
Ronald F. Dutt |  | Chief Executive Officer |  |  | 223,216 |  |  | 2021 Plan |  | Annually over 3 years from Grant Date
Charles Scheiwe |  | Chief Financial Officer |  |  | 42,750 |  |  | 2021 Plan |  | Annually over 3 years from Grant Date
Jeffrey Mason |  | Vice President of Operations |  |  | 54,934 |  |  | 2021 Plan |  | Annually over 3 years from Grant Date
(1) | Subject to $100,000 ISO limitation under the 2021 Plan
Salary Increases On October 20, 2023, pursuant to the recommendation of the Compensation Committee, the Board approved the following salary increases (the “FY2024 Annual Salary”) to the following executive officers, effective for the fiscal year 2024 (“FY2024”): SCHEDULE OF DEFERRED COMPENSATION SALARY INCREASES
Name |  | Position |  | Current Annual Salary |  |  | Salary for FY2024 |
Ronald F. Dutt |  | Chief Executive Officer |  | $ | 300,000 |  |  | $ | 375,000 |
Charles Scheiwe* |  | Chief Financial Officer |  | $ | 205,200 |  |  | $ | 205,200 |
Jeffrey Mason |  | Vice President of Operations |  | $ | 206,000 |  |  | $ | 230,720 |
* | Plus an additional supplemental payment of $4,000 per month
New Subordinated Credit Facility On November 2, 2023, the Company entered into a Credit Facility Agreement (“Cleveland Agreement”) with Cleveland (the “Lender”) for a subordinated unsecured revolving line of credit (the “2023 Subordinated LOC “) of up to $2,000,000 (the “Commitment Amount”). In connection with the 2023 Subordinated LOC, the Company issued a subordinated unsecured promissory note for the Commitment Amount in favor of Cleveland (the “Note”). All amounts outstanding under the Note are due on August 15, 2025 (the “Due Date”). The Company may, from time to time, prior to the Due Date, draw down, repay, and re-borrow on the Note, by giving notice to the Lender. The Note accrues interest at Secured Overnight Financing Rate plus nine percent (9%) per annum on each Advance from and after the date of disbursement of such Advance and is payable on the Due Date subject to acceleration upon an event of default under the terms of the Note. All indebtedness under the Note is subject to the terms and conditions of the Subordination Agreement by and between the Lender and GBC. As consideration of the Lender’s commitment to provide the Advances to the Company, the Company agreed to issue the Lender warrants to purchase 41,196 shares of common stock (the “Warrants”) which rights are represented by a warrant certificate (“Warrant Certificate”). Subject to certain ownership limitations, the Warrants are exercisable immediately from the date of issuance, expire on the five (5) year anniversary of the date of issuance and have an exercise price of $3.24 per share. The exercise price of the Warrants is subject to certain adjustments, including stock dividends, stock splits, combinations and reclassifications of the common stock. Termination of the Subordinated LOC On November 2, 2023, the Credit Facility Agreement dated May 11, 2022 with Cleveland, Herndon Plant Oakley, Ltd., and other lenders for a line of credit for up to $5 million was terminated. There were no draws, amounts due and obligations owed to the Lenders as of the termination date. In connection with such termination, the related promissory notes were cancelled. Advisory Agreement On November 2, 2023, the Company entered into a Financial Advisory Agreement with Cleveland Capital Management, L.L.C., a Delaware limited liability company (“Advisor”) pursuant to which the Advisor agreed to advise the Company with financial and operation analysis until December 31, 2023. As compensation for services, Company agreed to pay the Advisor an advisory fee of $60,000.

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- Definition The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 855 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//855/tableOfContent Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 855 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147483399/855-10-50-2 + Details
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