Core Insights - Ascendiant Capital reports Society Pass (NASDAQ: SOPA) fiscal Q4 2023 results with adjusted revenue estimated at $10 million, highlighting strong economic expansion and urbanization as growth drivers [1] - Society Pass plans to spin off two businesses, Thoughtful Media Group Inc and NusaTrip Inc, via IPOs in 2024, which are expected to create significant shareholder value [2] - Ascendiant maintains a BUY rating for Society Pass but has lowered the 12-month price target from $41.25 to $21, indicating a substantial upside potential from the current share price [3] Company Overview - Society Pass Inc., established in 2018, operates a data-driven e-commerce ecosystem across Southeast Asia, focusing on interconnected verticals such as loyalty, digital media, travel, telecommunications, and lifestyle [6] - The company aims to innovate and reshape the digital commerce landscape in the region, serving both consumers and merchants/brands [6] Leadership Commentary - CEO Raynauld Liang expressed enthusiasm regarding Ascendiant's positive growth outlook for Society Pass in 2024, emphasizing the importance of the upcoming IPOs for shareholder value [4] - Liang also mentioned the company's strong financing and compliance with Nasdaq as factors contributing to a positive future outlook [5]

Core Insights - Ascendiant Capital reports Society Pass (NASDAQ: SOPA) fiscal Q4 2023 results with adjusted revenue estimated at $10 million, highlighting strong economic expansion and urbanization as growth drivers [1] - Society Pass plans to spin off two businesses, Thoughtful Media Group Inc and NusaTrip Inc, via IPOs in 2024, which are expected to create significant shareholder value [2] - Ascendiant maintains a BUY rating for Society Pass but has lowered the 12-month price target from $41.25 to $21, indicating a substantial upside potential from the current share price [3] Company Strategy - CEO Raynauld Liang expresses optimism regarding Ascendiant's positive growth outlook for Society Pass in 2024, emphasizing the importance of the upcoming IPOs for shareholder value [4] - Liang also mentions the company's recent strong financing and compliance with Nasdaq, reinforcing confidence in future goals [5] Company Overview - Society Pass Inc., established in 2018, operates a data-driven e-commerce ecosystem across Southeast Asia, focusing on interconnected verticals such as loyalty, digital media, travel, telecommunications, and lifestyle [6]

PART I FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents Society Pass Incorporated's unaudited Q1 2024 condensed consolidated financial statements, detailing balance sheets, operations, and cash flows [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2024, total assets declined to $13.3 million, liabilities to $10.0 million, and equity to $3.2 million | Balance Sheet Highlights | March 31, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | **Current Assets** | | | | Cash and cash equivalents | $1,619,232 | $3,628,670 | | Total current assets | $5,541,140 | $8,098,635 | | **Total Assets** | **$13,276,105** | **$16,363,174** | | **Current Liabilities** | | | | Total current liabilities | $9,374,608 | $10,486,062 | | **Total Liabilities** | **$10,029,823** | **$11,334,012** | | **Total Equity** | **$3,246,282** | **$5,029,162** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2024 saw total revenue of $1.85 million and a reduced net loss of $2.8 million, driven by lower general and administrative expenses | Income Statement Highlights | Three months ended March 31, 2024 | Three months ended March 31, 2023 | | :--- | :--- | :--- | | Total revenue | $1,847,079 | $1,966,103 | | Gross income | $492,649 | $686,237 | | General and administrative expenses | ($3,243,671) | ($5,991,886) | | Loss from operations | ($2,891,661) | ($5,450,232) | | **Net Loss** | **($2,839,224)** | **($5,390,213)** | | **Net Loss Per Share (Basic & Diluted)** | **($1.21)** | **($3.00)** | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities improved to $2.4 million in Q1 2024, with total cash decreasing by $2.1 million to $1.7 million | Cash Flow Summary | Three months ended March 31, 2024 | Three months ended March 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($2,361,485) | ($4,015,201) | | Net cash used in investing activities | $0 | ($190,061) | | Net cash used in financing activities | ($10,279) | ($541,988) | | **Net Change in Cash and Cash Equivalents** | **($2,050,750)** | **($5,175,395)** | | **Cash at End of Period** | **$1,673,232** | **$13,827,941** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Key disclosures include a going concern warning, segment revenue breakdown, and subsequent events like a reverse stock split - The company's financial statements have been prepared on a going concern basis, but management has identified substantial doubt about its ability to continue as a going concern due to a net loss of **$2.8 million**, negative operating cash flow of **$2.5 million**, a working capital deficit of **$3.8 million**, and an accumulated deficit of **$102.7 million** as of March 31, 2024[39](index=39&type=chunk) - The company operates in six reportable segments: e-Commerce, Merchant POS, Online grocery and food deliveries, Telecommunication reseller, Digital marketing, and Online ticketing and reservation[126](index=126&type=chunk) - The company is involved in **three litigation cases** with former employees concerning compensation, stock, and alleged misappropriation of intellectual property, with ultimate outcome and potential damages not probable nor estimable at this time[233](index=233&type=chunk)[235](index=235&type=chunk)[236](index=236&type=chunk) - Subsequent to the quarter end, the company effected a **1-for-15 reverse stock split** of its common stock on May 1, 2024, and increased the authorized shares of Series X Super Voting Preferred Stock from **3,500 to 10,000** on May 9, 2024[242](index=242&type=chunk)[244](index=244&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=54&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's digital ecosystem strategy, Q1 2024 financial performance, and reliance on future financing for operations and growth - The company is building a digital ecosystem and loyalty platform in Southeast Asia (SEA) through acquisitions, focusing on verticals like lifestyle, telecommunications, digital marketing, and travel[249](index=249&type=chunk)[252](index=252&type=chunk) | Key Operational Data | Three months ended March 31, 2024 | Three months ended March 31, 2023 | | :--- | :--- | :--- | | Revenue, net | $1,847,079 | $1,966,103 | | Gross income | $492,649 | $686,237 | | General and administrative expenses | ($3,243,671) | ($5,991,886) | | Net Loss | ($2,839,224) | ($5,390,213) | - The decrease in revenue was mainly due to lower sales from the e-commerce platform facing higher competition and the travel vertical experiencing interruptions from a system upgrade, while the improvement in net loss was primarily due to a significant decrease in G&A expenses resulting from cost restructuring and no new acquisition-related costs[267](index=267&type=chunk)[272](index=272&type=chunk)[274](index=274&type=chunk) - The company expects to continue to rely on cash generated through financing from public or private offerings to finance its operations and future acquisitions, but believes it has sufficient liquidity for at least the next year[277](index=277&type=chunk)[281](index=281&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=76&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable as the company qualifies as a "smaller reporting company" and is therefore not required to provide these disclosures - Disclosure is not required for "smaller reporting companies"[369](index=369&type=chunk) [Controls and Procedures](index=76&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective as of March 31, 2024, with no material changes to internal controls during the quarter - Based on an evaluation as of the end of the period, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are **not effective** at the reasonable assurance level[370](index=370&type=chunk) - No changes in the company's internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[371](index=371&type=chunk) PART II OTHER INFORMATION [Legal Proceedings](index=77&type=section&id=Item%201.%20Legal%20Proceedings) The company states that it may be involved in various legal proceedings in the ordinary course of business, with material details in Note 20 - Material legal proceedings are detailed in Note 20, "Commitments and Contingencies," within the financial statements section of this report[374](index=374&type=chunk) [Risk Factors](index=77&type=section&id=Item%201A.%20Risk%20Factors) The company reports that there have been no material changes to the risk factors previously disclosed in its Form 10-K filed on April 15, 2024 - There have been no material changes to the risk factors disclosed in the Company's Form 10-K for the year ended December 31, 2023[375](index=375&type=chunk) [Other Information](index=77&type=section&id=Item%205.%20Other%20Information) This section discloses a corporate action taken after the reporting period, specifically an increase in authorized Series X Super Voting Preferred Stock - On May 9, 2024, the company increased the number of authorized shares of Series X Super Voting Preferred Stock from **3,500 to 10,000**[379](index=379&type=chunk)

PART I [Item 1. Business](index=7&type=section&id=Item%201.%20Business) Society Pass is building a digital ecosystem and loyalty platform in Southeast Asia through strategic acquisitions across various verticals - The company's primary business is building a **digital ecosystem and loyalty platform** in Southeast Asian (SEA) countries through the acquisition and operation of e-commerce platforms and mobile applications[58](index=58&type=chunk)[288](index=288&type=chunk) - The company operates across five main verticals: **loyalty, lifestyle, telecommunications, digital media, and travel**, having scaled back its food and beverage delivery operations in 2023[61](index=61&type=chunk)[318](index=318&type=chunk) - A key growth strategy is the continued **opportunistic acquisition of regional e-commerce companies** to expand service offerings and increase registered consumers and merchants[45](index=45&type=chunk) - The company plans to market its universal **"Society Points" loyalty program** in 2024 to generate additional merchant revenue and create customer loyalty[46](index=46&type=chunk) - The company owns multiple registered trademarks, including **"Society Pass", "SOPA", "Leflair", and "HOTTAB"**, central to its brand identity and intellectual property strategy[52](index=52&type=chunk)[89](index=89&type=chunk) [Item 1A. Risk Factors](index=13&type=section&id=Item%201A.%20Risk%20Factors) The company faces substantial risks including limited operating history, capital needs, intense competition, international operations, evolving regulations, and potential Nasdaq delisting - The company has a **limited operating history** in an evolving industry, increasing the risk of failure[54](index=54&type=chunk)[91](index=91&type=chunk) - A failure to **raise additional capital** would materially adversely affect the company's business, financial condition, and results of operations[55](index=55&type=chunk)[93](index=93&type=chunk) - The business is subject to risks from its **international operations in Southeast Asia**, including economic and political instability, currency exchange rate fluctuations, and complex legal environments[185](index=185&type=chunk)[162](index=162&type=chunk)[188](index=188&type=chunk) - The company received a Nasdaq notice on May 25, 2023, for failing to maintain the **minimum $1.00 bid price**, requiring compliance by May 20, 2024, to avoid delisting[205](index=205&type=chunk)[230](index=230&type=chunk) - The founder, Dennis Nguyen, beneficially owns stock providing approximately **52.0% of the voting power**, making the company a "controlled company" with significant influence over corporate matters[211](index=211&type=chunk)[237](index=237&type=chunk)[218](index=218&type=chunk) - As an **"emerging growth company,"** the company is subject to reduced disclosure requirements, potentially making its common stock less attractive to some investors[215](index=215&type=chunk)[242](index=242&type=chunk) [Item 1B. Unresolved Staff Comments](index=30&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved comments from the Securities and Exchange Commission staff - **No unresolved staff comments**[221](index=221&type=chunk) [Item 1C. Cybersecurity](index=30&type=section&id=Item%201C.%20Cybersecurity) The Board of Directors oversees cybersecurity risks, managed daily by the Group Chief Technology Officer, with no material incidents reported to date - The **Board of Directors oversees cybersecurity risk management**, with the audit committee monitoring major financial risk exposures[273](index=273&type=chunk) - The **Group Chief Technology Officer** is primarily responsible for day-to-day cybersecurity risk assessment and management[224](index=224&type=chunk) - The company has not been aware of any cybersecurity threats that have **materially affected** its business strategy, operations, or financial condition[250](index=250&type=chunk)[274](index=274&type=chunk) [Item 2. Properties](index=32&type=section&id=Item%202.%20Properties) The company operates from leased office spaces across Southeast Asia, recording a **$1,411,226** Right-of-Use asset and lease obligation as of December 31, 2023 - The company **does not own any real estate** and leases all its office properties across Singapore, Vietnam, Philippines, Thailand, and Indonesia[275](index=275&type=chunk)[252](index=252&type=chunk) - As of December 31, 2023, the company recorded a **Right-of-Use (ROU) asset and lease obligation of $1,411,226**[275](index=275&type=chunk) [Item 3. Legal Proceedings](index=32&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in three significant New York legal cases, including employment actions by former employees and counterclaims for intellectual property misappropriation - The company is involved in **three pending lawsuits** in the Supreme Court of the State of New York, New York County[252](index=252&type=chunk)[276](index=276&type=chunk) - Former employee Rahul Narain has claims for compensation and stock damages, with a court entering a judgment of **$1,082,078.91** against the company, which is under appeal[277](index=277&type=chunk) - Former employee Thomas O'Connor has claims for salary, expenses, and significant damages related to undelivered stock valued at **$9.9 million**, plus an entity claim for **$8 million** in preferred stock, with the case in discovery[254](index=254&type=chunk) - The company has filed its own lawsuit against former employees Narain and O'Connor, alleging **misappropriation of intellectual property** and other related torts[278](index=278&type=chunk) [Item 4. Mine Safety Disclosures](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's business operations - **Not applicable**[257](index=257&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=35&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under "SOPA", with **110 stockholders** as of March 31, 2024, and no cash dividends paid or share repurchases in Q4 2023 - The company's common stock trades on the **Nasdaq Capital Market** under the symbol **"SOPA"**[282](index=282&type=chunk) - As of March 31, 2024, there were **110 stockholders of record**[282](index=282&type=chunk) - The company has **never declared or paid cash dividends** and does not anticipate doing so, intending to retain earnings for business operations and expansion[283](index=283&type=chunk) - The company **did not repurchase any equity securities** during the fourth quarter ended December 31, 2023[285](index=285&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In FY2023, revenue increased to **$8.17 million**, net loss reduced to **$18.1 million**, but cash declined to **$3.6 million**, indicating continued reliance on external financing [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=56&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a "Smaller Reporting Company," the company is not required to provide disclosures for this item - Disclosure for this item is **not required** as the company qualifies as a "Smaller Reporting Company"[469](index=469&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=57&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Audited financial statements for 2023 and 2022 are presented, with the auditor's report highlighting **"going concern" doubt** due to significant net losses and negative operating cash flow [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=119&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting principles, financial disclosure, or auditing scope - **None reported**[969](index=969&type=chunk) [Item 9A. Controls and Procedures](index=119&type=section&id=Item%209A.%20Controls%20and%20Procedures) As of December 31, 2023, management concluded that both disclosure controls and internal control over financial reporting were effective, with no material changes in Q4 2023 - Management concluded that the company's **disclosure controls and procedures were effective** as of the end of the reporting period[970](index=970&type=chunk) - Management assessed and concluded that **internal control over financial reporting was effective** as of December 31, 2023[971](index=971&type=chunk) - There were **no material changes in internal control over financial reporting** during the fourth quarter of 2023[972](index=972&type=chunk) [Item 9B. Other Information](index=119&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - **None**[973](index=973&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=119&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - **Not applicable**[974](index=974&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=120&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section details the company's executive officers and five-member Board of Directors, including its four established committees and adopted Code of Ethics - The report lists executive officers and directors, including **Raynauld Liang (Group CEO)**, **Tan Yee Siong (Group CFO)**, and **Tan Bien Kiat (Vice Chairman of the Board)**[949](index=949&type=chunk)[976](index=976&type=chunk) - The Board of Directors has established an **Audit Committee, a Remuneration Committee, a Nominating and Corporate Governance Committee, and an Executive Committee**[956](index=956&type=chunk) - The company has adopted a **Code of Ethics** applicable to all employees and directors, designed to deter wrongdoing and promote ethical conduct[1008](index=1008&type=chunk) [Item 11. Executive Compensation](index=126&type=section&id=Item%2011.%20Executive%20Compensation) This section details executive compensation for FY2023 and FY2022, including former CEO Dennis Nguyen's **$2.08 million** and current CEO Raynauld Liang's **$755,571** total compensation Summary Compensation Table (2023) | Name and Principal Position | Salary/Bonus ($) | Stock Awards ($) | Option Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | | Dennis Nguyen, Former CEO | 547,500 | — | 1,530,642 | 2,078,142 | | Raynauld Liang, CEO | 310,281 | — | 445,290 | 755,571 | | Tan Yee Siong, CFO | 119,533 | 22,500 | 35,000 | 177,033 | - Dennis Nguyen resigned as CEO on **October 5, 2023**, and entered into a consulting agreement through December 31, 2025[1013](index=1013&type=chunk) - Raynauld Liang was appointed CEO on **October 5, 2023**, with a 5-year employment agreement including an annual base salary of **$600,000** and **250,000 incentive stock options**[994](index=994&type=chunk) Director Compensation (2023) | Name | Fees Paid in Cash ($) | Stock Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | | Tan Bien Kiat | 50,000 | 100,000 | 150,000 | | Jeremy Miller | 50,000 | 100,000 | 150,000 | | Linda Cutler | 50,000 | 100,000 | 150,000 | | John Mackay | 50,000 | 100,000 | 150,000 | [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=128&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) As of March 31, 2024, founder Dennis Nguyen beneficially owned **55.4%** of total voting stock, primarily via Series X Super Voting Preferred Stock, with **1,188,490 shares** available for future issuance - As of March 31, 2024, there were **37,762,362 shares of common stock outstanding**[1017](index=1017&type=chunk)[1041](index=1041&type=chunk) - Founder and former CEO Dennis Nguyen beneficially owns **94.3% of Series X Super Voting Preferred Stock**, equating to **55.4% of the company's total voting power**[1042](index=1042&type=chunk)[1043](index=1043&type=chunk) - All officers and directors as a group beneficially own **14.9% of the common stock** and **7.7% of the total voting stock**[1042](index=1042&type=chunk) - Under the 2021 Equity Incentive Plan, **1,188,490 securities remained available** for future issuance as of December 31, 2023[1045](index=1045&type=chunk)[1023](index=1023&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=130&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company discloses several related party transactions, primarily involving founder Dennis Nguyen and director Tan Bien Kiat, including a software development agreement and stock issuances - The company entered a software development agreement with CVO Advisors Pte. Ltd., an entity for which former CEO Dennis Nguyen holds a call option, with parties currently in litigation over its exercise[1024](index=1024&type=chunk) - In 2021, entities controlled by director Tan Bien Kiat and former CEO Dennis Nguyen were issued shares of **Series C-1 Preferred Stock**[1047](index=1047&type=chunk)[1025](index=1025&type=chunk) - In August and September 2021, the company issued **3,300 shares of Super Voting Preferred Stock** to Dennis Nguyen and **200 shares** to Raynauld Liang, with each share carrying **10,000 votes**[1048](index=1048&type=chunk) [Item 14. Principal Accountant Fees and Services](index=131&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) The company's independent auditor, Onestop Assurance PAC, billed **$432,237** in total fees for FY2023, a decrease from 2022, with all services subject to Audit Committee pre-approval Accountant Fees (2023 vs. 2022) | Fee Category | 2023 | 2022 | | :--- | :--- | :--- | | Audit fees | $420,737 | $364,600 | | Audit-related fees | $11,500 | $25,000 | | All other fees | $0 | $90,000 | | **Total fees** | **$432,237** | **$479,600** | - The Audit Committee's policy is to **pre-approve all audit and non-audit services** performed by the independent registered public accounting firm[1066](index=1066&type=chunk)[1028](index=1028&type=chunk) PART IV [Item 15. Exhibits, Financial Statement Schedules](index=132&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section provides an index of all exhibits filed with the Annual Report on Form 10-K, including governance documents, material contracts, and required certifications - The report includes an **index of all filed exhibits**, such as governance documents, material contracts, and required certifications[1030](index=1030&type=chunk) - Key exhibits listed include various **share and asset purchase agreements**, employment agreements, and the **2021 Equity Incentive Plan**[1056](index=1056&type=chunk)[1032](index=1032&type=chunk) [Item 16. Form 10-K Summary](index=135&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has elected not to provide a summary for this item - The company has **elected not to include summary information**[1057](index=1057&type=chunk)[1070](index=1070&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2023 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File Number: 001-41037 SOCIETY PASS INCORPORATED (Exact name of registrant as specified in its charter) (State or other jurisdic ...

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) Unaudited financials reflect asset and revenue growth, a shift to gross income, and a narrowed net loss [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$32.7 million** by June 30, 2023, driven by cash, with liabilities and equity rising Condensed Consolidated Balance Sheet Highlights (in US$) | Metric | June 30, 2023 (Unaudited) | December 31, 2022 (Audited) | | :--- | :--- | :--- | | **Total Current Assets** | $22,996,945 | $14,594,840 | | Cash and cash equivalents | $18,930,986 | $10,839,434 | | **Total Assets** | **$32,698,742** | **$23,973,480** | | **Total Current Liabilities** | $11,614,299 | $10,198,391 | | **Total Liabilities** | **$12,687,425** | **$11,263,652** | | **Total Equity** | **$20,011,317** | **$12,709,828** | [Condensed Consolidated Statements of Operations and Other Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Other%20Comprehensive%20Loss) Revenue surged to **$4.23 million**, yielding **$1.26 million** gross income, and narrowing net loss to **$8.61 million** Statement of Operations Highlights (in US$) | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | **Total Revenue** | $4,229,812 | $944,152 | | Sales – digital marketing | $2,794,734 | $0 | | Sales – online ticketing and reservation | $1,042,749 | $0 | | **Gross Income (Loss)** | **$1,263,396** | **($14,931)** | | Loss from Operations | ($8,866,045) | ($14,215,836) | | **Net Loss Attributable to Society Pass** | **($8,610,185)** | **($14,052,702)** | | Net Loss Per Share (Basic & Diluted) | ($0.30) | ($0.61) | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Stockholders' equity decreased to **$12.7 million** due to net loss and share repurchases, offset by issuances - The company repurchased **611,605 shares** for a total cost of **$640,525** during the six months ended June 30, 2023[17](index=17&type=chunk)[245](index=245&type=chunk) - Shares were issued for services (**$696,125**), accrued salaries (**$344,332**), and exercise of options (**$1,226,793**) during the first six months of 2023[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operations increased to **$6.9 million**, with financing activities using **$0.6 million**, leading to an **$8.1 million** cash decrease Cash Flow Summary (in US$) | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($6,886,251) | ($5,448,474) | | Net cash used in investing activities | ($217,521) | ($227,873) | | Net cash provided by (used in) financing activities | ($640,525) | $10,351,413 | | **Net Change in Cash and Cash Equivalents** | **($8,083,271)** | **$4,748,069** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the company's e-commerce ecosystem, accounting policies, liquidity, segment revenue, acquisitions, and compensation - The company operates in six reportable segments: e-Commerce, Merchant POS, Online grocery and food deliveries, Telecommunication reseller, Digital marketing, and Online ticketing and reservation[46](index=46&type=chunk)[140](index=140&type=chunk) - In Q2 2023, the company acquired PT Wahana Cerita Indonesia (digital marketing) and Mekong Leisure Travel Join Stock Company (travel agency), accounting for them as business combinations[26](index=26&type=chunk)[149](index=149&type=chunk)[157](index=157&type=chunk) - As of June 30, 2023, the company had cash of **$10.9 million**, a working capital surplus of **$4.4 million**, and an accumulated deficit of **$89.7 million**[35](index=35&type=chunk)[323](index=323&type=chunk) - For the six months ended June 30, 2023, one customer (Customer A, located in the United States) accounted for **47.92%** of total revenues[274](index=274&type=chunk)[309](index=309&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=52&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes revenue growth to new acquisitions, improved gross income, and reduced operating expenses, maintaining liquidity - The company is building a digital ecosystem and loyalty platform in Southeast Asia, focusing on six operating verticals: loyalty, lifestyle, grocery and food delivery, telecommunications, digital marketing, and travel[289](index=289&type=chunk)[291](index=291&type=chunk) - As of August 9, 2023, the company has onboarded over **3.3 million** registered consumers and over **650,000** registered merchants on its platform[302](index=302&type=chunk) - Management believes the company has sufficient liquidity to continue its business plans and operations for at least one year, expecting to rely on cash generated through future financing activities[323](index=323&type=chunk) [Results of Operations](index=55&type=section&id=Results%20of%20Operations) Revenue increased to **$4.2 million**, leading to **$1.3 million** gross income and a narrowed net loss of **$8.7 million** from acquisitions and cost controls Comparison of Results of Operations (Six Months Ended June 30) | Metric | 2023 (in US$) | 2022 (in US$) | Change Driver | | :--- | :--- | :--- | :--- | | **Revenue** | $4,229,812 | $944,152 | Increase from newly acquired digital marketing and online ticketing businesses | | **Gross Income (Loss)** | $1,263,396 | ($14,931) | Turnaround due to higher margin revenue from new acquisitions | | Sales and Marketing Expenses | ($229,378) | ($449,392) | Decrease due to planned cost reductions and marketing strategy redesign | | General and Administrative Expenses | ($9,870,935) | ($13,186,062) | Decrease due to effectiveness of cost control plan | | **Net Loss** | ($8,699,443) | ($14,177,999) | Decreased loss due to higher revenue, gross income, and lower operating expenses | - The net loss for the six months ended June 30, 2023 includes significant non-cash items: **$2,267,250** in stock-based compensation and **$935,531** in depreciation and amortization[318](index=318&type=chunk) [Liquidity and Capital Resources](index=57&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2023, the company held **$10.9 million** cash, with **$6.9 million** used in operations, asserting sufficient liquidity Cash and Liquidity Position (as of June 30, 2023) | Metric | Amount (in US$) | | :--- | :--- | | Cash and cash equivalents | $10,839,434 | | Restricted cash | $80,631 | | Stockholders' Equity | $13,123,593 | Cash Flow Summary (Six Months Ended June 30, 2023) | Metric | Amount (in US$) | | :--- | :--- | | Net cash used in operating activities | ($6,886,251) | | Net cash used in investing activities | ($217,521) | | Net cash used in financing activities | ($640,525) | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=68&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable as the company qualifies as a "smaller reporting company" - Disclosure is not required for "smaller reporting companies"[426](index=426&type=chunk) [Item 4. Controls and Procedures](index=68&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were not effective as of June 30, 2023, with no material changes - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are not effective at the reasonable assurance level[427](index=427&type=chunk) - No material changes in internal control over financial reporting were identified during the quarter[428](index=428&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=69&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, but management anticipates no material effect on financial condition - The company is subject to various legal proceedings but does not expect them to have a material adverse effect on its financial condition[431](index=431&type=chunk) [Item 1A. Risk Factors](index=69&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors previously disclosed in the Form 10-K filed on March 23, 2023 - There have been no material changes to the risk factors disclosed in the company's Form 10-K filed on March 23, 2023[433](index=433&type=chunk) [Item 2. Unregistered sales of Equity Securities and Use of Proceeds](index=69&type=section&id=Item%202.%20Unregistered%20sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities were reported during the period - None[434](index=434&type=chunk) [Item 3. Defaults Upon Senior Securities](index=69&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section is not applicable - Not applicable[434](index=434&type=chunk) [Item 4. Mining Safety Disclosure](index=69&type=section&id=Item%204.%20Mining%20Safety%20Disclosure) This section is not applicable - Not applicable[435](index=435&type=chunk) [Item 5. Other Information](index=69&type=section&id=Item%205.%20Other%20Information) This section is not applicable - Not applicable[436](index=436&type=chunk) [Item 6. Exhibits](index=70&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the report, including required certifications and Inline XBRL documents - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1) and Inline XBRL data files (101 series)[438](index=438&type=chunk)

[PART I FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited Q1 2023 financial statements reflect substantial revenue growth and a shift to gross income, alongside a narrowed net loss, though cash and total assets decreased due to operational usage and share repurchases [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Summary (as of March 31, 2023 vs. December 31, 2022) | Balance Sheet Item | March 31, 2023 (Unaudited) | December 31, 2022 (Audited) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $13,755,377 | $18,930,986 | | Total current assets | $16,862,370 | $22,996,945 | | Intangible assets, net | $6,676,065 | $7,458,089 | | TOTAL ASSETS | $26,074,425 | $32,698,742 | | **Liabilities & Equity** | | | | Total current liabilities | $9,350,649 | $11,614,299 | | TOTAL LIABILITIES | $10,508,932 | $12,687,425 | | TOTAL EQUITY | $15,565,493 | $20,011,317 | | TOTAL LIABILITIES AND EQUITY | $26,074,425 | $32,698,742 | - Total assets decreased by approximately **$6.6 million**, primarily due to a **$5.2 million** reduction in cash and cash equivalents from December 31, 2022, to March 31, 2023[11](index=11&type=chunk) - Total equity decreased by approximately **$4.4 million**, driven by the net loss for the period and share repurchases, which were partially offset by share-based compensation[11](index=11&type=chunk) [Condensed Consolidated Statements of Operations and Other Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Other%20Comprehensive%20Loss) Consolidated Statement of Operations Summary (For the three months ended March 31) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Total revenue | $2,042,580 | $445,090 | | Gross income (loss) | $686,237 | $(14,793) | | Total operating expenses | $(6,136,469) | $(6,584,931) | | Loss from operations | $(5,450,232) | $(6,599,724) | | NET LOSS | $(5,390,213) | $(6,591,405) | | Net loss per share (Basic & Diluted) | $(0.20) | $(0.30) | - Revenue increased significantly year-over-year, driven by new revenue streams from digital marketing (**$1.28M**) and online ticketing (**$0.49M**), which were not present in Q1 2022[13](index=13&type=chunk) - The company achieved a gross profit of **$686,237** in Q1 2023, a substantial improvement from a gross loss of **$14,793** in Q1 2022[13](index=13&type=chunk) - Net loss attributable to Society Pass Incorporated narrowed to **$5.29 million** from **$6.55 million** in the prior-year quarter[13](index=13&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) - During Q1 2023, the company repurchased **511,760** shares of its common stock for a total cost of **$541,988**, which are now held as treasury stock[15](index=15&type=chunk) - The company issued **1,088,674** new common shares during Q1 2023 for services, accrued salaries, and the exercise of options, increasing additional paid-in capital by approximately **$1.8 million**[15](index=15&type=chunk) - Total stockholders' equity decreased from **$20.0 million** at the beginning of the period to **$15.6 million** at March 31, 2023, primarily due to the net loss of **$5.4 million** and share repurchases[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statement of Cash Flows Summary (For the three months ended March 31) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,015,201) | $(2,560,917) | | Net cash used in investing activities | $(190,061) | $(225,134) | | Net cash (used in) provided by financing activities | $(541,988) | $10,532,676 | | **Net change in cash and cash equivalents** | **$(5,175,395)** | **$7,702,784** | - Cash used in operating activities increased to **$4.0 million** in Q1 2023 from **$2.6 million** in Q1 2022, despite a lower net loss, primarily due to a significant decrease in accrued liabilities and other payables[21](index=21&type=chunk) - Financing activities resulted in a cash outflow of **$542k** in Q1 2023 due to share repurchases, a stark contrast to the **$10.5 million** cash inflow in Q1 2022 from a public offering[21](index=21&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company operates through subsidiaries in Vietnam, Singapore, India, and the Philippines, focusing on e-commerce platforms. It made several acquisitions in 2022, including businesses in online grocery, food delivery, digital media, and online ticketing[24](index=24&type=chunk)[29](index=29&type=chunk) - As of March 31, 2023, the company had a cash balance of **$13.8 million** and an accumulated deficit of **$86.4 million**. Management believes it has sufficient capital to continue operations[34](index=34&type=chunk) - The company operates in six reportable segments: Online Grocery and Food Deliveries, Digital marketing, Online ticketing and reservation, Telecommunications Reseller, e-Commerce, and Merchant Point of Sale (POS)[48](index=48&type=chunk) - On January 25, 2023, the Board authorized a **$2 million** share repurchase program. During Q1 2023, the company repurchased **511,760** shares for **$541,988**[218](index=218&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=47&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q1 2023's significant revenue growth and improved gross margin to new acquisitions, narrowing the net loss despite high operating expenses, while liquidity decreased due to cash burn and share repurchases [Overview](index=47&type=section&id=Overview) - The company is building a next-generation digital ecosystem and loyalty platform in Southeast Asia (SEA), focusing on Singapore, Thailand, Indonesia, Vietnam, and the Philippines[261](index=261&type=chunk) - The business operates across six key verticals: loyalty, lifestyle, grocery and food delivery, telecommunications, digital media, and travel[263](index=263&type=chunk) - As of May 12, 2023, the company has onboarded over **3.3 million** registered consumers and over **650,000** registered merchants onto its platform[273](index=273&type=chunk) [Results of Operations](index=50&type=section&id=Results%20of%20Operations) Q1 2023 vs Q1 2022 Performance | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Revenue | $2,042,580 | $445,090 | | Gross Income (Loss) | $686,237 | $(14,793) | | Gross Margin | 34% | -3% | | Sales & Marketing Expenses | $130,664 | $196,102 | | General & Admin Expenses | $5,991,886 | $5,840,598 | | Net Loss | $5,390,213 | $6,591,405 | - The significant increase in revenue was mainly due to sales from newly acquired businesses in the digital media and travel verticals[282](index=282&type=chunk) - The improvement in gross margin to **34%** was attributed to higher profit margins from the newly acquired businesses[285](index=285&type=chunk) - The decrease in net loss was primarily attributable to the increased gross profit, partially offset by high G&A expenses which include costs for acquisitions, public company expenses, and stock-based compensation[291](index=291&type=chunk)[289](index=289&type=chunk) [Liquidity and Capital Resources](index=52&type=section&id=Liquidity%20and%20Capital%20Resources) - As of March 31, 2023, the company had cash, cash equivalents, and restricted cash of **$13.8 million**, down from **$19.0 million** at December 31, 2022[292](index=292&type=chunk) - Net cash used in operating activities was **$4.0 million** for Q1 2023, primarily consisting of the net loss of **$5.4 million**, adjusted for non-cash items like stock-based compensation (**$1.9M**) and D&A (**$0.9M**)[297](index=297&type=chunk) - Net cash used in financing activities was **$542k**, resulting from the share buyback program[293](index=293&type=chunk)[301](index=301&type=chunk) - Management believes the company has sufficient liquidity to continue its current business plans and operations for at least one year[295](index=295&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=68&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company, as a "smaller reporting company," is not required to provide this information under Regulation S-K - Disclosure is not required for "smaller reporting companies"[392](index=392&type=chunk) [Item 4. Controls and Procedures](index=68&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were not effective at a reasonable assurance level as of the period end, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of the end of the period, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are not effective at the reasonable assurance level[393](index=393&type=chunk) - There were no changes in the company's internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[394](index=394&type=chunk) [PART II OTHER INFORMATION](index=68&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=68&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings in the ordinary course of business but does not anticipate that the ultimate liability from any pending matter will have a material effect on its financial condition, results of operations, or cash flows - The company is subject to various legal proceedings from time to time in the ordinary course of business[396](index=396&type=chunk) - Management does not expect any pending legal matters to have a material effect on the company's financial condition or results of operations[396](index=396&type=chunk) [Item 1A. Risk Factors](index=68&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Form 10-K filed on March 23, 2023 - As of the date of this report, there have been no material changes to the risk factors disclosed in the company's Form 10-K filed on March 23, 2023[398](index=398&type=chunk) [Item 2. Unregistered sales of Equity Securities and Use of Proceeds](index=69&type=section&id=Item%202.%20Unregistered%20sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[399](index=399&type=chunk) [Item 6. Exhibits](index=70&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including officer certifications and XBRL data files - The report includes certifications from the Principal Executive Officer and Principal Financial Officer, as well as Inline XBRL documents[404](index=404&type=chunk)

Part I [Business](index=6&type=section&id=Item%201.%20Business) Society Pass is building a digital ecosystem and loyalty platform in Southeast Asia across six verticals, connecting millions of consumers and merchants, despite incurring significant net losses - The company operates and acquires fintech and e-commerce platforms in Southeast Asia, focusing on building a next-generation digital ecosystem and loyalty platform across Singapore, Vietnam, Indonesia, Philippines, and Thailand[20](index=20&type=chunk) - The business is structured around six key verticals: loyalty, lifestyle, food and beverage delivery, telecommunications, digital media, and travel[21](index=21&type=chunk) Key Acquisitions to Date | Date | Acquired Company/Assets | Business Vertical | | :--- | :--- | :--- | | Feb 2021 | Leflair Assets | Lifestyle | | Feb 2022 | NREI (Pushkart) & Dream Space (Handycart) | Food Delivery | | May 2022 | Gorilla Networks Pte Ltd | Telecommunications | | Jul 2022 | Thoughtful Media Group (TMG) | Digital Media | | Jul 2022 | Mangan Assets | Food Delivery | | Aug 2022 | Nusatrip Group | Travel | | Dec 2022 | More Media (via TMG) | Digital Media | - As of March 21, 2023, the platform has onboarded over **3.3 million registered consumers** and over **200,000 registered merchants/brands**[31](index=31&type=chunk) Recent Financial Performance | Fiscal Year Ended | Net Loss | | :--- | :--- | | Dec 31, 2022 | $34,015,022 | | Dec 31, 2021 | $34,864,740 | - The company's growth strategy focuses on acquiring other e-commerce companies in SEA, launching its universal "Society Points" loyalty system in 2023, and forming strategic partnerships to expand its ecosystem[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk) [Risk Factors](index=11&type=section&id=Item%201A.%20Risk%20Factors) The company faces substantial risks from its limited operating history, capital reliance, intense competition, operational challenges, international market instability, evolving regulations, and significant founder control - Business Risks: The company has a limited operating history, may fail to raise needed capital, relies heavily on internet search engines, and faces a highly competitive e-commerce market[57](index=57&type=chunk)[60](index=60&type=chunk)[62](index=62&type=chunk)[66](index=66&type=chunk) - Operational Risks: Delays or lack of consumer acceptance of the "Society Points" loyalty program, inability to scale systems for increased volume, and challenges in integrating acquisitions could adversely affect the business[71](index=71&type=chunk)[72](index=72&type=chunk)[86](index=86&type=chunk) - International Risks: All operations are in Southeast Asia, exposing the company to economic, political, and legal instability, as well as significant inflationary pressures and foreign exchange risk[91](index=91&type=chunk)[93](index=93&type=chunk)[96](index=96&type=chunk)[98](index=98&type=chunk) - Regulatory and Compliance Risks: The business is subject to complex and evolving regulations regarding e-commerce, payment processing, data privacy, and anti-corruption laws like the FCPA, with public company status increasing compliance costs[110](index=110&type=chunk)[112](index=112&type=chunk)[120](index=120&type=chunk)[125](index=125&type=chunk) - Ownership Risks: The stock price is likely to be volatile, and the Founder, Chairman, and CEO, Dennis Nguyen, holds **65.7% of the voting power**, making the company a "controlled company" under Nasdaq rules[134](index=134&type=chunk)[141](index=141&type=chunk)[153](index=153&type=chunk) - The company is an "emerging growth company" under the JOBS Act, allowing for reduced disclosure requirements, which may make its common stock less attractive to some investors[148](index=148&type=chunk) [Unresolved Staff Comments](index=28&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[158](index=158&type=chunk) [Properties](index=28&type=section&id=Item%202.%20Properties) The company does not own any real estate and conducts its operations from various leased offices across Southeast Asia and the US, recording a Right-of-Use (ROU) asset and lease obligation of **$1,541,064** as of December 31, 2022 - The company's principal executive offices are located in Carson City, NV, and it does not own any real estate, leasing all its properties[159](index=159&type=chunk) Leased Properties Summary (as of Dec 31, 2022) | Country | Number of Leases | | :--- | :--- | | Singapore | 2 | | Vietnam | 2 | | Philippines | 4 | | Thailand | 2 | | Indonesia | 4 | [Legal Proceedings](index=30&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in three pending New York Supreme Court lawsuits, two employment-related and one contract enforcement, which it intends to vigorously defend without material adverse effect - The company is litigating three cases in the Supreme Court for the State of New York, New York County[162](index=162&type=chunk) - Two cases are employment actions from former employees Rahul Narain and Thomas O'Connor, who allege they are due compensation, bonuses, and company stock, with the company asserting counterclaims for breach of contract, unfair competition, and breach of fiduciary duty[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk) - A third case involves a company affiliate seeking specific performance of an agreement to purchase shares from an entity related to former employee Thomas O'Connor[167](index=167&type=chunk) - A prior action, SOSV IV LLV v. Society Pass Inc., has been settled and discontinued[168](index=168&type=chunk) [Mine Safety Disclosures](index=31&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[169](index=169&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=31&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under "SOPA" with **101 stockholders**, and it has never paid cash dividends, intending to retain earnings for business expansion - The company's common stock is traded on the Nasdaq Capital Market under the symbol "SOPA"[171](index=171&type=chunk) - As of March 21, 2023, there were **101 stockholders of record**[171](index=171&type=chunk) - The company has never declared or paid a cash dividend and does not expect to in the foreseeable future, intending to retain earnings for business financing[172](index=172&type=chunk) [Selected Financial Data](index=32&type=section&id=Item%206.%20%5BReserved%5D) As a smaller reporting company, Society Pass is not required to provide the information for this item - The Company is a smaller reporting company and is not required to provide the information under this item[175](index=175&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In FY2022, Society Pass significantly increased revenue to **$5.6 million** and achieved a gross profit, yet incurred a **$34.0 million** net loss due to high operating expenses and impairment charges, with cash decreasing to **$18.9 million** [Results of Operations](index=36&type=section&id=Results%20of%20Operations) Revenue surged to **$5.6 million** in 2022, yielding a gross profit of **$0.97 million**, but high operating expenses and a **$3.5 million** impairment charge resulted in a **$34.0 million** net loss Consolidated Results of Operations (2022 vs. 2021) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | **Revenue, net** | **$5,635,553** | **$519,885** | | Cost of revenue | ($4,668,580) | ($710,683) | | **Gross profit/loss** | **$966,973** | **($190,798)** | | Total operating expenses | ($35,123,029) | ($34,021,405) | | Loss from operations | ($34,156,056) | ($34,212,203) | | **NET LOSS** | **($34,015,022)** | **($34,864,740)** | - The significant increase in revenue was mainly due to an increase in sales from online platforms and newly acquired subsidiaries[200](index=200&type=chunk) - Revenue from the e-Commerce segment grew to **$2,118,191** in 2022 from **$482,002** in 2021, with newly acquired Digital Marketing and Online Ticketing segments contributing **$2,593,674** and **$724,991** respectively[201](index=201&type=chunk) - A goodwill impairment charge of **$3,499,881** was incurred in 2022, primarily related to the acquisitions of NREI, Gorilla, TMG, and Nusatrip[209](index=209&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) Cash decreased to **$18.9 million** by year-end 2022 due to **$14.5 million** in operating cash outflow, partially offset by **$10.2 million** from financing, with management asserting sufficient liquidity for over one year Cash and Cash Equivalents | Date | Amount | | :--- | :--- | | Dec 31, 2022 | $18,930,986 | | Dec 31, 2021 | $23,264,777 | Consolidated Cash Flow Summary | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($14,453,759) | ($10,813,938) | | Net cash provided by (used in) investing activities | $177,393 | ($246,837) | | Net cash provided by financing activities | $10,182,905 | $33,823,757 | - Net cash used in operating activities in 2022 was **$14.5 million**, primarily consisting of a net loss of **$34.0 million**, offset by non-cash items like stock-based compensation (**$8.3 million**) and goodwill impairment (**$3.5 million**)[217](index=217&type=chunk) - Net cash from financing activities in 2022 was **$10.2 million**, mainly from a public offering and warrant exercises, partially offset by loan repayments[222](index=222&type=chunk) [Critical Accounting Policies and Estimates](index=40&type=section&id=Critical%20Accounting%20Policies%20and%20Estimate) The company's US GAAP financial statements rely on significant estimates for revenue recognition, business combinations, asset impairment, and share-based compensation across its six reportable segments - The company is an "emerging growth company" but has irrevocably opted out of the extended transition period for complying with new or revised accounting standards[223](index=223&type=chunk) - Significant estimates are used for allowance for doubtful accounts, useful lives of intangible assets, impairment of goodwill, valuation of stock options and warrants, and the allocation of purchase consideration in business combinations[223](index=223&type=chunk)[332](index=332&type=chunk) - Business combinations are accounted for using the acquisition method under ASC 805, requiring assets and liabilities to be recorded at fair value[224](index=224&type=chunk) - Revenue is recognized under ASC 606 based on a five-step model, with revenue streams including online ordering (lifestyle), software/hardware sales (POS), grocery/food delivery, telecommunications, digital marketing, and online ticketing[228](index=228&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk) - Share-based compensation is accounted for under ASC 718, with awards measured at grant-date fair value, and the Black-Scholes model used for stock options[268](index=268&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a "Smaller Reporting Company," this item and its related disclosures are not required - Disclosure for this item is not required as the company qualifies as a "Smaller Reporting Company"[282](index=282&type=chunk) [Financial Statements and Supplementary Data](index=54&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for FY2022 and FY2021, including balance sheets, statements of operations, changes in equity, cash flows, and detailed notes Consolidated Balance Sheet Summary | Metric | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$32,698,742** | **$35,176,357** | | Total Current Assets | $22,996,945 | $29,632,687 | | **Total Liabilities** | **$12,687,425** | **$2,850,674** | | Total Current Liabilities | $11,614,299 | $2,439,621 | | **Total Equity** | **$20,011,317** | **$32,325,683** | Consolidated Statement of Operations Summary | Metric | FY 2022 | FY 2021 | | :--- | :--- | :--- | | **Total Revenue** | **$5,635,553** | **$519,885** | | Gross Income (Loss) | $966,973 | ($190,798) | | Loss from Operations | ($34,156,056) | ($34,212,203) | | **Net Loss** | **($34,015,022)** | **($34,864,740)** | | **Net Loss Per Share (Basic & Diluted)** | **($1.38)** | **($3.68)** | Consolidated Statement of Cash Flows Summary | Metric | FY 2022 | FY 2021 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($14,453,759) | ($10,813,938) | | Net Cash Provided by (Used in) Investing Activities | $177,393 | ($246,837) | | Net Cash Provided by Financing Activities | $10,182,905 | $33,823,757 | | **Net Change in Cash** | **($4,261,441)** | **$22,758,111** | | **Cash at End of Year** | **$19,003,336** | **$23,264,777** | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=121&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[602](index=602&type=chunk) [Controls and Procedures](index=121&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls were effective as of December 31, 2022, with no material changes to internal controls, and a management report on internal control over financial reporting is not yet required - Management concluded that as of the end of the period covered by the report, the company's disclosure controls and procedures were effective[604](index=604&type=chunk) - A report of management's assessment regarding internal control over financial reporting is not included due to a transition period for newly public companies[605](index=605&type=chunk) [Other Information](index=121&type=section&id=Item%209B.%20Other%20Information) The company reports no other information - None[607](index=607&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=121&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[608](index=608&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=122&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) The company's governance is led by CEO Dennis Nguyen, with a five-member Board including three independent directors and four established committees, operating under a Code of Ethics Key Executive Officers and Directors | Name | Position | | :--- | :--- | | Dennis Nguyen | Founder, Chairman and Chief Executive Officer | | Raynauld Liang | Group Chief Financial Officer | | Tan Bien Kiat | Vice Chairman of the Board | | Jeremy Miller | Director (Audit Committee Chair) | | Linda Cutler | Director (Remuneration Committee Chair) | | John Mackay | Director (Nominating Committee Chair) | - The Board of Directors consists of **five members**, three of whom are independent[626](index=626&type=chunk) - The Board has four committees: Audit, Remuneration, Nominating and Corporate Governance, and Executive[627](index=627&type=chunk) [Executive Compensation](index=127&type=section&id=Item%2011.%20Executive%20Compensation) In FY2022, CEO Dennis Nguyen's total compensation was **$2.6 million**, and CFO Raynauld Liang's was **$3.7 million**, largely from stock and option awards, with Mr. Nguyen holding a significant stock option Summary Compensation Table (2022) | Name and Principal Position | Salary/Bonus ($) | Stock Awards ($) | Option Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | | Dennis Nguyen, CEO | 1,167,500 | 1,426,691 | 0 | 2,594,191 | | Raynauld Liang, CFO | 510,000 | 2,783,594 | 415,048 | 3,708,642 | - CEO Dennis Nguyen has an outstanding 10-year stock option to purchase **1,945,270 shares** of common stock at an exercise price of **$6.49 per share**, granted in 2021[644](index=644&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=129&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) As of March 21, 2023, officers and directors collectively control **75.4%** of voting power, with CEO Dennis Nguyen individually holding **65.7%** through common and super-voting preferred stock - As of March 21, 2023, there were **27,082,849 shares** of common stock outstanding[649](index=649&type=chunk)[650](index=650&type=chunk) - Founder, Chairman, and CEO Dennis Nguyen beneficially owns **28.6% of common stock** and **94.3% of Series X Super Voting Preferred Stock**, granting him **65.7% of the total voting power**[651](index=651&type=chunk) - All officers and directors as a group control **75.4% of the total voting power**[651](index=651&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=131&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company engaged in related party transactions, primarily with CEO Dennis Nguyen and director Tan Bien Kiat, involving stock issuances for services and compensation, including a **$500,000** payable to Mr. Nguyen for accrued salary and bonus - The company has a call option to purchase CVO Advisors Pte. Ltd, a company that provided **$8 million** in software development services in 2018, which the CEO, Dennis Nguyen, exercised, but the matter is currently in litigation[658](index=658&type=chunk) - Entities controlled by director Tan Bien Kiat and CEO Dennis Nguyen received preferred and common stock in 2021 and 2022[658](index=658&type=chunk)[662](index=662&type=chunk)[663](index=663&type=chunk)[664](index=664&type=chunk) - In 2021, CEO Dennis Nguyen was issued **1,157,630 shares** of common stock for accrued compensation and was awarded a 10-year option to purchase **1,945,270 shares** for unpaid bonuses[662](index=662&type=chunk) - As of December 31, 2022, the company had a payable of **$500,000** to CEO Dennis Nguyen for accrued and unpaid salaries and bonus[659](index=659&type=chunk) [Principal Accountant Fees and Services](index=132&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Total fees to independent accountants were **$479,600** in 2022 (Onestop Assurance PAC) and **$395,000** in 2021 (RBSM LLP), with all services subject to Audit Committee pre-approval Audit and Non-Audit Fees | Fee Type | 2022 | 2021 | | :--- | :--- | :--- | | Audit fees | $364,600 | $190,000 | | Audit-related fees | $25,000 | $205,000 | | All other fees | $90,000 | $0 | | **Total fees** | **$479,600** | **$395,000** | - Onestop Assurance PAC served as the auditor for the fiscal year ending December 31, 2022, while RBSM LLP served as the auditor for the fiscal year ending December 31, 2021[664](index=664&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=133&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all exhibits filed with the Annual Report, including financial statements, corporate governance documents, material contracts, and certifications, with financial schedules omitted where not applicable - This section provides an index of all exhibits filed with the Form 10-K, including corporate governance documents, material contracts, and certifications required by the Sarbanes-Oxley Act[670](index=670&type=chunk)[672](index=672&type=chunk) [Form 10-K Summary](index=135&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has elected not to include a summary of the Form 10-K - The Company has elected not to include summary information[675](index=675&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2022 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File Number: 001-41037 SOCIETY PASS INCORPORATED (Exact name of registrant as specified in its charter) (State or other jurisdic ...

PART I - FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements) For H1 2022, revenue significantly increased to $944,152, but net loss widened to $14.18 million due to higher expenses, while cash rose to $28.0 million from a public offering [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to $37.5 million by June 30, 2022, driven by cash growth, with total equity rising to $34.4 million Condensed Consolidated Balance Sheet Highlights (as of June 30, 2022 vs. Dec 31, 2021) | Metric | June 30, 2022 (Unaudited) ($) | December 31, 2021 ($) | | :--- | :--- | :--- | | **Total Assets** | **$37,497,014** | **$35,176,357** | | Cash and cash equivalents | $28,012,846 | $23,264,777 | | Total current assets | $32,950,966 | $29,632,687 | | **Total Liabilities** | **$3,134,026** | **$2,850,674** | | Total current liabilities | $2,707,376 | $2,439,621 | | **Total Equity** | **$34,362,988** | **$32,325,683** | | Accumulated deficit | $(61,405,158) | $(47,352,456) | [Condensed Consolidated Statements of Operations and Other Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Other%20Comprehensive%20Loss) H1 2022 revenue surged to $944,152, but net loss widened to $14.05 million due to higher expenses, despite improved loss per share Statement of Operations Summary (Six Months Ended June 30) | Metric | 2022 ($) | 2021 ($) | | :--- | :--- | :--- | | Total Revenue | $944,152 | $17,289 | | Gross Loss | $(14,931) | $(87,568) | | Total Operating Expenses | $(14,200,905) | $(6,431,072) | | General and administrative expenses | $(13,186,062) | $(6,121,899) | | Loss from Operations | $(14,215,836) | $(6,518,640) | | Net Loss Attributable to Society Pass | $(14,052,702) | $(7,099,731) | | Net Loss Per Share (Basic & Diluted) | $(0.61) | $(0.96) | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Shareholders' equity increased from $32.3 million to $34.4 million in H1 2022, driven by a $10.4 million public offering and share issuances, partially offset by net loss - Key equity changes in the first six months of 2022 included raising **$10.4 million (net)** from a public offering, issuing shares for services (**$1.63 million**), business acquisitions (**$0.8 million**), and warrant exercises (**$0.36 million**)[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For H1 2022, net cash used in operating activities increased to $5.4 million, while financing activities provided $10.4 million, resulting in a $4.7 million net cash increase and an ending balance of $28.0 million Cash Flow Summary (Six Months Ended June 30) | Metric | 2022 ($) | 2021 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | $(5,448,474) | $(1,513,720) | | Net cash used in investing activities | $(227,873) | $(200,000) | | Net cash provided by financing activities | $10,351,413 | $1,322,505 | | **Net Change in Cash** | **$4,748,069** | **$(364,033)** | | **Cash at End of Period** | **$28,012,846** | **$142,633** | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail business operations, recent acquisitions like New Retail Experience and Gorilla Networks, and segment reporting across e-Commerce, POS, Online Grocery/Food Delivery, and Telecommunications Reseller, with further acquisitions post-quarter end - The company operates an online lifestyle platform ("Leflair"), provides POS hardware/software, and recently expanded into online grocery/food delivery and telecommunications through acquisitions in the Philippines and Vietnam[25](index=25&type=chunk) - As of June 30, 2022, the company had a cash balance of **$28.0 million** and an accumulated deficit of **$61.4 million**, with net cash from financing activities at **$10.4 million** for H1 2022, primarily from a public offering[33](index=33&type=chunk) - Subsequent to the quarter end, the company acquired Thoughtful Media Group (July 2022) and Mangan PH Food Delivery Services (July 2022), continuing its M&A strategy[287](index=287&type=chunk)[289](index=289&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=68&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes H1 2022 revenue growth to online platforms and acquisitions, while the widening net loss is due to increased general and administrative expenses; liquidity improved significantly with $28.0 million cash from a public offering, though disclosure controls are ineffective due to material weaknesses - The company operates five business verticals: lifestyle, grocery and food delivery, merchant software, telecommunication reseller, and loyalty, focusing on expanding its e-commerce ecosystem in Vietnam, Indonesia, and the Philippines (VIP countries)[294](index=294&type=chunk)[295](index=295&type=chunk) Results of Operations Summary (Six Months Ended June 30) | Metric | 2022 ($) | 2021 ($) | | :--- | :--- | :--- | | Revenue, net | $944,152 | $17,289 | | Gross Loss | $(14,931) | $(87,568) | | General and administrative expenses | $(13,186,062) | $(6,121,899) | | Net Loss | $(14,177,999) | $(7,099,731) | - The company's liquidity position strengthened significantly, with cash increasing to **$28.0 million** at June 30, 2022, from **$23.3 million** at year-end 2021, primarily due to **$10.4 million** in net proceeds from a public offering[318](index=318&type=chunk)[319](index=319&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=88&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No disclosure is provided as the company qualifies as a "smaller reporting company" - Disclosure is not required as the company qualifies as a "smaller reporting company"[404](index=404&type=chunk) [Controls and Procedures](index=88&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of June 30, 2022, due to a material weakness in internal controls stemming from inadequate segregation of accounting duties, with no material changes to internal controls during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are not effective at a reasonable assurance level[405](index=405&type=chunk) - The ineffectiveness is attributed to a material weakness caused by an inadequate level of supervision and segregation of duties due to the company's small size[406](index=406&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=89&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in several legal proceedings, including employment actions and a dispute with SOSV IV LLC, as detailed in Note 23, but does not anticipate a material financial impact - Material legal proceedings are described in Note 23 of the Notes to Condensed Consolidated Financial Statements[412](index=412&type=chunk) - As of June 30, 2022, the company had **$240,981** in outstanding legal fees related to these matters[413](index=413&type=chunk) [Risk Factors](index=89&type=section&id=Item%201A.%20Risk%20Factors) No disclosure is provided as the company qualifies as a "smaller reporting company" - Disclosure is not required as the company qualifies as a "smaller reporting company"[414](index=414&type=chunk) [Unregistered sales of Equity Securities and Use of Proceeds](index=89&type=section&id=Item%202.%20Unregistered%20sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) All unregistered sales of equity securities during the reported period were previously disclosed in a Current Report on Form 8-K - Unregistered sales of equity during the period were previously reported on Form 8-K[414](index=414&type=chunk) [Defaults Upon Senior Securities](index=89&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Not applicable [Mining Safety Disclosure](index=89&type=section&id=Item%204.%20Mining%20Safety%20Disclosure) Not applicable [Other Information](index=89&type=section&id=Item%205.%20Other%20Information) Not applicable [Exhibits](index=90&type=section&id=Item%206.%20Exhibits) This section provides an index of all exhibits filed with the Form 10-Q, including articles of incorporation, bylaws, warrant agreements, material contracts, and officer certifications