Society Pass co-founder and CEO Dennis Nguyen
The Supreme Court of the State of New York (the US) ordered Nasdaq-listed Society Pass to award a significant block of pre-IPO shares that could be valued as much as US$6.61 million, with up to an additional US$2.38 million penalty interest, to its co-founder and former CMO Thomas O’Connor for the breach of the Common Stock Purchase Warrant, court documents accessed by e27 showed.
Granting the partial summary judgment in O’Connor’s Motion against the data-driven loyalty company in May 2023, the court ruled that he had “validly exercised his right to purchase 1,148 shares of Society Pass Incorporated under the terms of the Warrant”.
As per Society Pass co-founder and CEO Dennis Nguyen’s deposition in the court (a copy of which is in e27‘s possession), each pre-IPO share is indicatively worth US$5,763, which translates to US$6.61 million. Adding the court-sanctioned penalty interest of 9 per cent per year will make it approximately US$9 million in total as of today.
The company has attempted to file an appeal against the judgement. The appeal is pending as of today.
As per Society Pass’s most recent 10-Q filing, it has only US$10.9 million left in its coffers. A 10-Q filing is a financial report that all public companies must submit to the US Securities and Exchange Commission (SEC) at the end of each of their first three fiscal quarters.
The judgment by the New York court is only part of O’Connor’s total claims against Society Pass. As per the court documents filed this week, O’Connor’s attorneys plan to file a new Motion for another US$8 million (plus penalty interests) he is owed under the signed agreements with the company.
It is not clear how Society Pass plans to fight this case if the appeal is rejected.
We have reached out to Nguyen for more details, but he has not responded to our email at the time of publishing this article.
We have also contacted O’Connor, but he is unavailable.
The court judgement is a severe blow to Nguyen and Society Pass as the company is facing multiple problems in the US. According to court documents, CEO Nguyen admitted the firm was already under SEC investigation earlier this year. We have searched Society Pass’s news releases and SEC public disclosures but couldn’t find its announcement regarding the investigation or its current status.
In addition, a separate lawsuit — filed two years ago by the other co-founder and former CTO Rahul Narain — is up for hearing in the New York Court this week. The lawsuit argues that Society Pass owes approximately US$1.3M to him as per his employment contract.
Furthermore, Society Pass was recently removed from the Russell 2000 index (a small-cap US stock market index), a blow to the company’s efforts to retain the coveted institutional investors that can greatly support Society Pass’s share price. This appears to be one reason why its shares have slumped considerably from a high of US$77 per share to now only US$0.40 erasing up to 99 per cent of investors’ money in the process.
The SEC investigation and the court cases could spell serious trouble for Society Pass with potentially negative impact to its balance sheet and possible delisting from Nasdaq.
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The post Exclusive: US court orders Society Pass to pay pre-IPO shares to co-founder and ex-CMO; company under SEC probe appeared first on e27.