Business Context and Reporting Period
Polar Power, Inc. (POLA) filed a Form 8-K on June 4, 2019, reporting the entry into a material definitive agreement. The company is incorporated in Delaware and trades on The NASDAQ Stock Market, LLC.
Key Financial Metrics
This filing does not report revenue, profit, cash flow, margins, debt, or liquidity metrics. The document focuses exclusively on the terms of a new financing arrangement.
Material Changes and Agreements
On May 20, 2019, the Company executed a Supplier Agreement with Citibank, N.A., effective June 4, 2019. Key terms include:
- Asset Sale: The Company may sell accounts receivable related to invoiced sales to AT&T and its affiliates.
- Pricing Mechanism: The sale price equals the face amount less a discount charge. The discount rate is 90-day LIBOR plus 1.00%.
- Discount Period: Calculated as the payment term days minus the invoice approval days, divided by 360.
- Example Calculation: For a $100 invoice with net 90 terms, a 10-day approval period, and a LIBOR of 2.80%, the Company would receive approximately $99.16 roughly 11 days after invoice issuance. This equates to discounted terms of 0.84%.
- Termination: Either party may terminate with 30 business days' notice, or 5 business days' notice in the event of a material breach.
- Modification: Citibank may change pricing terms with 30 days' prior written notice.
Guidance, Outlook, and Risks
The filing contains no forward-looking guidance, management commentary on future performance, or discussion of general business risks. The primary contingency noted is the ability of Citibank to alter pricing terms at its sole discretion.
Investor Verification Checklist
- Verify the current 90-day LIBOR rate to calculate the actual discount cost under the agreement.
- Confirm the volume of accounts receivable generated from AT&T to assess the potential impact on cash flow.
- Review the full text of Exhibit 10.1 (Supplier Agreement) for additional covenants or restrictions not summarized in the 8-K.
- Monitor future filings for any changes to pricing terms or termination notices.