A new complaint has been filed against Flux Power Holdings, Inc. (FLUX) by shareholder (plaintiff) Asfa Kassam on November 1, 2024, in the U.S. District Court of Nevada. The three Defendants in the complaint include the company, CEO and President Ronald F Dutt, and CFO Charles Scheiwe. The plaintiff alleges that he bought FLUX stock at artificially inflated prices between November 11, 2022 and September 30, 2024 (Class Period) and is now seeking compensation for the financial losses. To learn more about the lawsuit click here.
California-based Flux Power Holdings operates in the electric battery manufacturing segment. It designs and produces lithium-ion battery packs and storage solutions for industrial and commercial usage.
The filed complaint states that the defendants misled Flux investors in violation of Sections 10(b) and 20(a) of the Securities Exchange Act, during the Class Period.
Plaintiff’s Allegations
According to the complaint, Flux intentionally manipulated the financial statements, including the inventory, gross profit, and current assets, to depict a healthier picture of the company. On the other hand, Flux understated its liabilities. The financials were misrepresented from Q1 FY23 until Q3 FY24.
What’s worse, the defendants allegedly certified the accounts in their respective capacities, resulting in a failure to exercise proper oversight and control over the reported financial statements.
Flux Power’s Misrepresentations
The truth became clear on September 5, 2024, when Flux Power issued a Restatement Announcement with the SEC. Flux Power notified the SEC that it made material misstatements related to its assets and liabilities in the previous financial reports. The company added that investors should no longer rely on the prior financial reports.
Additionally, Flux Power stated that the accounting errors revealed a “material weakness” in the company’s controls and a lack of oversight of the company’s financial reporting. Flux stock fell 5.4% on the news on September 6.
To conclude, the defendants allegedly overstated the financials of the company, inducing shareholders to buy the stock. Year-to-date, FLUX shares have plunged 38.20%, causing massive damage to shareholder returns.
