Netsol Technologies

Kurta Law is investigating broker recommendations of Netsol Technologies (NTWK). Investors should know that these were risky securities that may have been unsuitable for many investors. Regulation Best Interest requires brokers to consider their broker’s best interests before commending a stock. This securities regulation also requires brokers to exercise care and skill when making recommendations.  

If you believe you suffered losses as a result of broker misconduct, contact Kurta Law. Call (877) 600-0098 or email info@kurtalawfirm.com.  

The Offering 

The prospectus dated March 1, 2012, announced an offering by Netsol Technologies of 14,500,000 shares of common stock for $0.40 per share. At the time of the offering, the per-share price of this stock was $0.84, and the company had received notice from NASDAQ that it was in danger of being de-listed from the stock exchange.  

Low-priced stocks, also known as “penny stocks,” are always high risk.  

About Netsol Technologies  

According to the prospectus, Netsol Technologies provides a financial suite application for the financing, leasing, and lending industries. It also offers application development, IT consulting and services, and project management.  

Risks Associated with Netsol Technologies Investments  

The prospectus clearly discloses the following risks. Brokers either knew or should have known about the following risks.  

Outstanding Stocks 

The prospectus states that there were 57,103,559 shares of common stock outstanding at the time of the offering. The price of the common stock could decline if common stockholders sell a large number of shares.  

Financial Controls Over Financial Reporting  

Netsol Technologies announced that there was a material weakness in its internal control over financial reporting. Specifically, management identified that accounting staff did not have sufficient technical accounting knowledge for complex U.S. reporting requirements.  

Possible Geopolitical Unrest in Pakistan  

Geopolitical unrest in the Middle East could negatively affect the business, since Netsol Technologies’ largest center of product research and development service delivery.  

Additional Financing  

Netsol Technologies would need to obtain additional capital in the future. It was not certain if the business could find financing on acceptable terms, or at all, which could force Netsol Technologies to revise its business plan.  

Uncertainties Regarding New Product Developments  

The prospectus discloses that “to date, no significant revenues have been generated from the commercial sale of our newest products and our products may not generate revenues in the future.” New versions of their existing failure are “subject to the risks of failure inherent in the development of products based on new technologies.” 

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  

Contact Kurta Law today for a free case evaluation – keep in mind that you have a limited time to file a claim. Our attorneys do not collect a fee unless we win your case. If you have any questions, call (877) 600-0098 or email info@kurtalawfirm.com.