ParaZero Technologies

Kurta Law is investigating recommendations of ParaZero Technologies (PRZO) stock for their possible unsuitability for investors. Brokers have an obligation to recommend investments that match an investor’s risk profile, and recommendations of overly risky stocks violate securities regulations.

If you lost money on your investment in ParaZero Technologies, consider reaching out to a securities attorney. Investors may be required by their brokerage firms to resolve their complaints through FINRA arbitration, which is designed to be a quicker and lower-cost alternative to civil court. Contact us at (877) 600-0098 or email info@kurtalawfirm.com to speak to one of our securities attorneys for free today.

What is ParaZero Technologies?

According to the prospectus, ParaZero Technologies Ltd. (PRZO) is an aerospace company specializing in drone safety systems, particularly its SafeAir system, which is a parachute deployment technology for unmanned drones.

What are the Risks Associated with ParaZero Technologies?

Development-stage companies like ParaZero Technologies come with special risks. In its stock prospectus, ParaZero Technologies describes some of the current and potential challenges it faces.

Financial Uncertainty and History of Losses

As stated in its prospectus, ParaZero Technologies has “incurred significant losses” in its short history, founded in 2013. Notably, it had accumulated losses of over $14.6 million as of December 31, 2022, and a net loss of more than $1.6 million for that year alone.

The company has predominantly funded its operations by issuing equity securities as it works to complete development and commercialization its products. However, the success of these efforts is not guaranteed and they may never generate revenue for the company.

As a result of these conditions, the company’s financial statements contain a paragraph expressing “substantial doubt” as to its ability to continue as a going concern.

Competition and Need for New Products

The markets for unmanned aerial vehicles (UAVs) are young and highly competitive. ParaZero Technologies states that it will need to continue developing new products to keep up with the “rapid technological change” inherent to these markets and that the failure to do so could lead to a loss of revenue and market share.

Compliance with Government Regulations

At the time of the prospectus, the regulatory environment for the commercial use of unmanned aerial systems (UAS) was “undergoing substantial change.” The success of ParaZero Technologies’ products in the U.S. will depend on the approval of the FAA as well as any future restrictions or regulations on the use of commercial drones.

The company will also need approval from other nations’ civil aviation authorities and other governmental agencies in order to market its products internationally. In particular, bodies such as the European Union have more strict laws regarding the collection, use, and storage of personal information that may apply to the use of ParaZero Technologies’ products. These laws may “make the use of [its] products more difficult,” as consumers would need to be knowledgeable of and compliant with these laws.

Status as a Foreign Private Issuer

ParaZero Technologies is an Israeli company that, as of the prospectus, qualifies as a foreign private issuer. This status exempts the company from certain Nasdaq and SEC regulations and other securities laws. For example, the company is not required to file financial statements with the SEC as often as domestic companies.

This means that investors will not have access to the same amount of information as they would with a domestic company, and this may influence investors’ ability to make decisions about their investment. Investors may not also have the same protections they are normally afforded under U.S. law.

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.  

What Can I Do If I Suffered Losses?

If you have concerns about your investment in ParaZero Technologies, reach out to a Kurta Law securities attorney today. Our attorneys have experience navigating FINRA arbitration and securing fair settlements for clients. Call (877) 600-0098 or email info@kurtalawfirm.com.