Vuzix Corporation

Kurta Law is investigating broker recommendations of Vuzix Corporation. These investments were high-risk and may have been unsuitable for many investors. Unsuitable investments violate FINRA Rule 2111, which requires brokers to consider their investor’s risk tolerance. Regulation Best Interest also requires brokers to exercise reasonable care and skill when they make recommendations.

If a broker recommended unsuitable investments to you, you may have a case for a securities lawyer. Call (877) 600-0098 or email info@kurtalawfir.com for a free case evaluation.

About Vuzix Corporation

According to the prospectus, Vuzix Corporation works on the design, manufacture, and sale of “video eyewear,’ including head-mounted displays, wearable displays, video glasses, and personal viewers.

The Offering

The prospectus dated July 30, 2013, announced that Vuzix Corporation was offering 3,500,000 shares of common stock and warrants to purchase 3,500,000 shares of common stock. Warrants give investors the right to purchase stocks at a certain price by a specified deadline.

At the time of the offering, Vuzix Corporation traded over the counter. Stocks typically trade over-the-counter because they are issued by smaller companies and they do not meet the listing requirements of public exchanges.

Risks Associated with Vuzix Corporation

The prospectus states, “Any investment in our common stock involves a high degree of risk.” This information was readily available to brokers, who should have known that Vuzix Corporation stocks posed a high risk to investors. 

Necessary Financing

According to the prospectus, the financial statements from 2012 include an explanatory paragraph regarding substantial doubt about the company’s ability to continue as a going concern. These shaky financials may make it difficult for the company to obtain the financing needed to continue operations.

Net Losses

The prospectus discloses that Vuzix Corporation has incurred net losses since its inception. If it continued to incur net losses, the market price of the common stock could decline.

Default Loan

Vuzix Corporation was in default under its loan agreement with its senior lender. The senior lender could therefore foreclose on its assets, which could require the company to curtail or cease operations.

Defense Engineering Contracts

The prospectus states that Vuzix Corporation depended on defense-related engineering contracts and the sales of specialized products to defense customers. After the sale of TDG Assets, Vuzix Corporation’s revenues materially declined and might not increase unless they developed new markets and products.

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.