Bynd Cannasoft Enterprises

Kurta Law is investigating broker recommendations of Bynd Cannasoft Enterprises (NASDAQ:BCAN). Bynd Cannasoft Enterprises revealed significant risks in its prospectus, the document that companies file with the SEC to register their offering. Brokers have an obligation to only recommend investments that fit your risk profile. If you specified that you wanted low-risk stocks, then your broker should not have recommended this investment. Securities rules and regulations, including Regulation Best Interest and FINRA Rule 2111, prohibit the recommendation of overly risky stocks.  

What is Bynd Cannasoft Enterprises and Bynd Israel?  

According to the prospectus, Bynd Cannasoft Enterprises sells customer relationship management software. At the time of the prospectus, it was in the process of constructing and licensing a cannabis farm and an indoor cannabis facility. Bynd Cannasoft Enterprises was also developing a device called “EZ-G,” which would purportedly regulate the flow of low-concentration CBD oils into the soft tissues of the female sexual organs. BYND Israel, Bynd Cannasoft Enterprises’s subsidiary, intended to build the cannabis farm and indoor cannabis growing facility.  

Risk Factors 

There were significant risk factors associated with this July 19, 2023, offering. The following are just some of the risks included in the prospectus.  

Substantial Dilution  

The prospectus reveals that after purchasing common shares for $1.50 per share, after deducting the underwriting discount, investors can expect their shares to be worth $1.37.  

Use of Proceeds  

Stockholders had no say in how Bynd Cannasoft Enterprises used the proceeds of the offering. They could have put the money toward potential acquisitions and other business opportunities. Investors had to take it on blind faith that Bynd Cannasoft Enterprises executives would make savvy choices.  

Bynd Israel’s Single Client 

Over 83% of Bynd Israel’s business came from one single client. Any changes to that relationship would affect Bynd Israel’s revenues.  

New Software Platforms  

New software platforms may contain errors or defects that could affect the company’s bottom line. The software also relies on third-party computer hardware that may fluctuate in price, or Bynd may lose their rights to use the hardware.  

Risks Associated with New Markets  

Cannabis is still a relatively new market. The unpredictability of this market makes it impossible to accurately forecast the growth.  

Competition  

There is significant competition in the customer relationship manager space.  

New and Changing Regulations  

Bynd Cannasoft Enterprises is subject to new and changing regulations. These could adversely affect the company’s ability to make money. Because cannabis is a “controlled substance” in some areas, the company may need to come up with certain licenses.  

Aegis Capital Corp. Underwriting  

Investors should know that Aegis Capital Corp. served as the underwriter for this offering. Underwriters take on risk in exchange for a fee, which could motivate certain investment banks to underwrite investments that pose too much risk for the average retail investor. Additionally, brokers may have conflicts of interest when they recommend shares that are underwritten by an affiliate of their brokerage firm. 

Kurta Law Can Help  

Investors who lost money on Bynd Cannasoft Enterprises may be able to recover their losses. Speak to a securities attorney if you believe you may have a case. Call (877) 600-0098 or email info@kurtalawfirm.com.