Court approves Flux Power derivative lawsuit settlement preliminarily

A federal court has granted preliminary approval for a settlement in a shareholder derivative lawsuit against Flux Power Holdings Inc. (NASDAQ: FLUX) and several of its officers and directors.

The U.S. District Court for the Southern District of California issued the preliminary approval order on December 8, 2025, for a settlement agreement dated August 12, 2025. The derivative action was filed by shareholder Ronald Pearl on behalf of the company against seven individual defendants including officers and directors.

The lawsuit alleged that the individual defendants breached their fiduciary duties by making false or misleading statements regarding the company's financial condition. Specifically, the complaint claimed that Flux Power's financial statements from November 10, 2022 through the filing date included overstated inventory, gross profit, current assets, and total assets, while understating cost of sales and net loss.

The allegations also claimed the defendants failed to disclose that the company would need to restate its previously filed financial statements and that it understated internal control weaknesses. The defendants dispute the allegations and entered the settlement without acknowledging fault, liability, or wrongdoing.

Under the settlement terms, Flux Power agreed to implement corporate governance reforms. The settlement also includes attorney fees and expenses for the plaintiff's counsel, plus a service award of up to $2,000 for the plaintiff.

A final settlement hearing is scheduled for April 2, 2026, at 9:30 a.m. PT at the Edward J. Schwartz United States Courthouse in San Diego. Current shareholders as of August 12, 2025, will be bound by the court's final judgment unless they file objections by March 12, 2026.

The settlement documents have been filed as an exhibit to the company's Form 8-K with the Securities and Exchange Commission.

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