XG Technology

Kurta Law is investigating broker recommendations of XG Technology (NASDAQ: XGTI). 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 the XG Technology

According to the prospectus, XG Technology designs, develops and delivers advanced wireless communications products. It operates through two business units: xMax and Integrated Microwave Technology.

The Offering

The prospectus dated December 20, 2016, announced that XG Technology was offering 3,800,000 Class A units consisting of common stock and warrants and 2,400 Class B units consisting of series E convertible preferred stock and warrants.

Class A units debuted for $2.00 per unit and Class B units debuted for $1,000 per unit.

Risks Related to XG Technology

The prospectus states, “Our business faces many risks and an investment in our securities involves significant risks.” The following are just some of the risks Kurta Law has chosen to highlight. To see the full list, see the prospectus.

History of Operating Losses

According to the prospectus, XG Technology has recorded a net loss in each reporting period since its inception. The company also expected to realize net losses for at least the next 12 months.

Uncertainty Regarding the Company’s Ability to Continue

The company 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, if at all, to achieve profitability.

Additional Capital

XG Technology disclosed that it may need additional capital in the future to develop new products. The business may not be able to secure adequate additional financing when needed on acceptable terms, or at all.

Defects or Errors

Defects or errors in XG Technology products could harm the brand and relations with customers. If the company experiences product recalls, it could incur significant expenses and decrease demand for its products.

Long-Term Contracts with Manufacturers

The prospectus states that XG Technology does not have long-term contracts with existing contract manufacturers. The loss of existing manufacturers could have a material adverse effect on the business.

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.