Kurta Law is investigating investor losses on Rail Vision (NASDAQ: RVSN). If you lost money on these risky shares, you may be the victim of securities fraud. Keep reading to learn about this investment and the risks stated in the prospectus.
What is an “Emerging Growth” Company?
Shares of Rail Vision came with increased risks for investors, due in part to its status as an emerging growth company. Emerging growth companies can submit limited filings to the SEC as long as the company meets certain specifications, such as having less than $1 billion in revenue during its last fiscal year. For instance, the company does not have to disclose its executive compensation and is only required to submit two years of audited financial statements.
What is Rail Vision?
Rail Vision states on its website that it uses AI to extend the visual range of train conductors by 1.2 miles. The technology purportedly uses AI to identify objects on or near the tracks.
Risks Associated with Rail Vision Investment
Rail Vision’s prospectus reveals numerous risks that brokers should have considered before recommending this investment. Because of these factors, investors who purchase shares of these should have specifically indicated that they wanted higher-risk securities.
Investments that do not take an investor’s financial goals, risk tolerance, age, and other factors into consideration may violate rules and regulations set forth by the Financial Industry Regulatory Authority (FINRA). FINRA describes overly risky investments as unsuitable.
The following are just a few examples of risks identified in the prospectus.
Development Stage Company
Rail Vision’s utility and profitability are not yet proven. It only recently received patent approval in India and certification for EU railway standards. As of June 30, 2021, the company accumulated a deficit of approximately $39.2 million.
As the prospectus states: “We are a development-stage company and have limited operating history on which to assess the prospects of our business, have incurred significant losses since the date of our inception, and anticipate that we will continue to incur significant losses until we are able to successfully commercialize our products…We may never be profitable.”
There are other factors that may negatively affect investors. The company is located in Israel, and “Provisions of Israeli law…may delay, prevent or otherwise impede a merger with or an acquisition of, our company, even when the terms of such a transaction are favorable to us and our shareholders…Our headquarters, research, and development and other significant operations are located in Israel, and, therefore, our results may be adversely affected by political, economic, and military instability in Israel.”
Raising Additional Capital
Rail Vision stipulated that it may “seek to raise capital through a combination of private and public offerings” and these capital-raising efforts may dilute investors’ ownership interest.
Aegis Capital Corp
Kurta Law has learned Aegis received a significant 7% concession in exchange for its underwriting services. Underwriting allows a company to debut on a stock exchange.
Aegis Capital Corp has a history of regulatory actions. As recently as July 2022, the SEC issued a Cease-and-Desist Order alleging that Aegis representatives had recommended overly risky Variable Interest Rate Structured Products (VRSPs). The firm’s alleged lack of supervision allegedly made it possible for Aegis representatives to make material misstatements and omissions about VRSPs to customers, assuring customers that the investment guaranteed principal protection when it did not.
What Can Kurta Law Do for Me?
Kurta Law routinely represents investors in cases of alleged unsuitable recommendations. Our attorneys work on contingency, meaning they only collect a fee if they win your case. Contact us today for a free case evaluation: (877) 600-0098 or firstname.lastname@example.org.