RiT Technologies

Kurta Law is investigating investor losses on shares of RiT Technologies stock. The company discloses the substantial risks involved in its stock in its prospectus, risks which may have made it inappropriate for investors’ risk profiles. Brokers have an obligation to recommend investments tailored to investors’ desired level of risk, under FINRA Rule 2111 and Regulation Best Interest.

Investors may be required by their brokerage to pursue FINRA arbitration instead of a civil suit. If you have concerns about your investment in RiT Technologies, contact (877) 600-0098 or email info@kurtalawfirm.com today to speak to a securities attorney for free.

What is RiT Technologies?

According to the prospectus, RiT Technologies Ltd. (RITT) provides intelligent infrastructure management (IIM) products, i.e., network security solutions for data centers and other work environments. Its customers include government agencies, and medical, educational, and financial institutions.

The company also reportedly produces “Beamcaster,” a product designed to assist in the design, deployment, installation, and maintenance of indoor optical wireless technology.

In July 2016, RiT Technologies was delisted from the Nasdaq Capital Market.

What are the Risks Associated with RiT Technologies?

Like many tech companies, RiT Technologies describes risks in its prospectus relating to the need to develop new products to keep up with its extremely competitive market.

The company also discloses some significant risks that are unique to its history and structure.

Potential Price Fluctuations

RiT Technologies discloses in its prospectus that its stock price has “fluctuated significantly over the years and could continue to be volatile,” and that this applies to fluctuations in trading volume as well.

Besides market factors and other influences on tech companies’ stock prices, RiT Technologies may also experience a decrease in share price due to substantial sales of shares, conversion of shares under its loan agreement with STINS COMAN, and the exercise of the warrants issued in this offering.

Financial Prospects and Reliance on Beamcaster

RiT Technologies states: “We incurred net losses and negative cash flows in each fiscal year since 2007 and we expect such losses and negative cash flows to continue in the foreseeable future.”

The company introduced its Beamcaster in 2013, with the expectation to invest “significant resources” into this product line. However, RiT Technologies also states that it does not have “any meaningful previous experience in developing, marketing or distributing this type of product.” The failure or underperformance of the Beamcaster could have significant negative consequences for the company’s prospects and financial situation.

Risks Related to STINS COMAN

In 2013, RiT Technologies entered into several agreements with STINS COMAN wherein the company’s outstanding loan was converted into shares. Accordingly, STINS COMAN and its affiliate Invencom gained beneficial ownership of approximately 87.9% of the company’s outstanding shares.

This degree of ownership provides STINS COMAN with substantial financial and managerial power over the company, including the ability to elect all of RiT Technologies’ directors and approve or reject mergers. Further, the Chairman of the Board of Directors at the time of the prospectus was also President of STINS COMAN and had a majority interest in it.

For investors, this concentration of ownership means that RiT Technologies’ stock price may be influenced by unrelated decisions by STINS COMAN, and members of RiT Technologies’ board may have conflicts of interest.

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 lost money on your investment in RiT Technologies, our experienced securities attorneys may be able to secure a fair settlement for you. Kurta Law attorneys have 5-star reviews on Google and a track record when it comes to cases of broker misconduct and unsuitable investment recommendations. Call (877) 600-0098 or email info@kurtalawfirm.com.