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SUBSEQUENT EVENTS
12 Months Ended
Jun. 30, 2018
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

15. 

SUBSEQUENT EVENTS


On September 6, 2018 (the “Effective Date”), as reported in our Current Report filed with the SEC on September 7, 2018, we entered into a Credit Agreement with Minnesota Bank & Trust, a Minnesota state banking corporation (“MBT”), providing for a $5,000,000 term loan (the “Term Loan”) as well as a $2,000,000 revolving loan (the “Revolving Loan” and together with the Term Loan, collectively the “Loans”), evidenced by a Term Note A and a Revolving Credit Note made by us in favor of MBT. The Loans are secured by substantially all of our assets pursuant to a Security Agreement entered into on the Effective Date between us and MBT. We paid loan origination fees to MBT on the Effective Date in the amount of $60,000.


The Term Loan matures on October 1, 2025 and bears interest at a fixed rate of 5.53% per annum. An initial payment of interest only is due on October 1, 2018.Commencing November 1, 2018 and continuing on the first day of each subsequent month thereafter until the maturity date, we are required to make payments of principal and interest on the Term Loan of $71,921.43, plus any additional accrued and unpaid interest through the date of payment. The Revolving Loan matures on September 6, 2019 unless earlier terminated pursuant to its terms and bears interest at the greater of (a) 4.5% or (b) the difference of the prime rate as published in the Money Rates section of the Wall Street Journal minus 0.50%. Commencing on the first day of each month after we initially borrow against the Revolving Loan and each month thereafter until maturity, we are required to pay all accrued and unpaid interest on the Revolving Loan through the date of payment. Any principal on the Revolving Loan that is not previously prepaid shall be due and payable on the maturity date (or earlier termination of the Revolving Loan).


Any payment on the Loans not made within seven days after the due date is subject to a late payment fee equal to 5% of the overdue amount. Upon the occurrence and during the continuance of an event of default, the interest rate of both Loans will be increased by 3% and MBT may, at its option, declare the Loans immediately due and payable in full.


The Credit Agreement and Security Agreement contain representations and warranties, affirmative, negative and financial covenants, and events of default that are customary for loans of this type.


In conjunction with the above, we terminated our loan with Farmers & Merchants Bank of Long Beach effective September 4, 2018.


On September 10, 2018, we discovered a supplier quality issue in one of our legacy batteries which will require a product recall. We are currently examining the components that may contain particulates which should have been rejected by our supplier and we are identifying all lots that will be included in the recall as well as the customers that are impacted by the recall. No significant current contracts are affected. For illustrative purposes, to describe the magnitude of the recall, we sold $338,000 of these batteries during fiscal 2018. We are currently investigating the issue and will be able to estimate our expected recall related expenses once the affected lots are identified, anticipated units to be returned are quantified, and potential re-work solutions are identified. At this time, we do not know the amount of other costs that may be incurred related to the recall or any amounts that may be recovered either through our supplier or our $1 million commercial product recall insurance policy, which contains a $50,000 deductible per occurrence. As our analysis is ongoing, we do not know at this time whether or not we will file a claim with our insurance.