NXTID Inc.

Kurta Law is investigating broker recommendations of NXTID Inc. (NASDAQ: NXTD). These shares were high-risk and therefore unsuitable for many investors. The Financial Industry Regulatory Authority (FINRA) defines suitable investments as investments that fit an investor’s risk tolerance. Securities rules and regulations are designed to protect investors from unsuitably risky investments. For instance, Regulation Best Interest requires investors to consider their investor’s risk tolerance – among other criteria – before recommending an investment.  

If you believe your broker recommended an unsuitably high-risk investment, contact Kurta Law today. Call (877) 600-0098 or e-mail info@kurtalawfirm.com.  

What is NXTID Inc.?  

According to the prospectus, NXTID Inc. is an early-stage company that focuses on biometric technology. This includes a “wocket,” a “secure mobile electronic smart wallet.” NXTID also purports to provide biometric security for mobile devices and facial recognition products.  

The Offering  

The prospectus dated October 16, 2015, announced NXTID Inc. was offering 1,500,000 shares of common stock. The shares debuted for $0.70 per share. Penny stocks, or stocks that trade for less than $1.00, are always high-risk.  

Risks Related to the NXTID Inc. Offering 

The following risks are clearly disclosed in the prospectus. The prospectus is the document that companies register with the Securities and Exchange Commission (SEC) when offering a security.  

Ability to Continue as a Going Concern 

At the time of the prospectus, NXTID Inc. disclosed that it had only completed the initial stages of its business plan and could provide no assurance that it would be able to generate a sufficient amount of revenue to stay in business.  

Insiders and Affiliated Parties Own a Significant Portion of the Common Stock  

Executive officers, directors, and affiliated parties beneficially own approximately 62.9% of the outstanding common stock. Sales by these parties could negatively affect the valuation of the company.  

Management Discretion  

The management has broad discretion in applying the net proceeds from the offering. They may invest the net proceeds in interest-bearing securities, which may not yield a favorable return for stockholders.  

Immediate and Substantial Dilution in Stock Price 

The prospectus warned that customers would experience an immediate and substantial dilution in the net tangible book value per share.  

Volatile Prices  

The prospectus also warns that stock prices for their “relatively unknown company” have been volatile. It also states, “You may be unable to sell your shares of common stock at our above purchase price, which may result in substantial losses to you.”  

Potential De-Listing from the NASDAQ Exchange  

Stocks must maintain a stock price of at least $1.00 to trade on the NASDAQ public stock exchange. In 2015, NXTID Inc. received a deficiency notice from NASDAQ. 

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.