NOTE 12 – SUBSEQUENT EVENTS

Private Placement Transactions (See Note 1)

In July, 2012, we sold an additional 1,690,063 shares of common stock and issued 338,013 five year Warrants for an aggregate purchase price of $700,000 to ten (10) accredited investors.

In August 2012 we sold an aggregate of 603,594 shares of common stock and issued 120,719 five year Warrants for an aggregate purchase price of $250,000 to four (4) accredited investors.

The common stock purchased in the private placement and the common stock issued upon exercise of warrants has piggyback registration rights. The securities offered and sold in the private placement have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act.

On September 4, 2012, the Company entered into an agency agreement with American Capital Partners (ACP), a Financial Industry Regulatory Authority (FINRA) registered broker-dealer for the purpose of advising and assisting the Company, on a best efforts basis, with the $2,000,000 private placement of our common stock and warrants.  The agreement expires February 25, 2014. The terms of the agreement require the Company to pay a total cash fee of nine percent (9%) of the value received from each investor.  Additionally the Company agreed to issue shares to ACP equal to seven percent (7%) of the shares placed by ACP.  The Company will also reimburse ACP for legal fees up to $10,000 incurred in connection with this placement by ACP.

Revolving Line of Credit

On September 24, 2012, Flux Power, Inc., entered into a certain Unrestricted and Line of Credit (“Line of Credit) with Esenjay Investments, LLC (“Esenjay”) pursuant to which Esenjay agreed to provide us with a revolving line of credit for $1,500,000 (“Line of Credit”). Borrowings under the Line of Credit is secured by the assets of the Company and bears interest at 8% per annum, with all unpaid principal and accrued interest due and payable on September 24, 2014. There is no prepayment penalty under the Line of Credit. Proceeds from the Line of Credit can be used at the discretion of the Company and the Company intends to use it for working capital. As of September 24, 2012, the Company has not borrowed any amounts under the Line of Credit. Esenjay is one of our major shareholders which beneficially own approximately 43% of our common stock. Mr. Michael Johnson, our director, is the director and shareholder of Esenjay.