10-Q: Society Pass Reports Wider Q3 Loss Amid Strategic Shifts

Society Pass Inc. reported a significantly increased net loss for the third quarter and first nine months of 2025, despite improved gross margins and successful capital raises through subsidiary IPOs.

Summary

• Net loss attributable to Society Pass Incorporated for the three months ended September 30, 2025, was $5,118,989, compared to $1,377,885 for the same period in 2024.
• Net loss for the nine months ended September 30, 2025, was $6,481,069, an increase from $6,156,153 for the nine months ended September 30, 2024.
• Total revenue for the three months ended September 30, 2025, decreased to $1,380,382 from $1,675,894 in 2024, primarily due to a decrease in digital marketing revenue.
• Total revenue for the nine months ended September 30, 2025, increased to $5,355,380 from $5,233,483 in 2024, driven by growth in online ticketing and reservations.
• Gross income significantly improved, reaching $887,340 for Q3 2025 (up from $365,646 in Q3 2024) and $2,766,025 for 9M 2025 (up from $1,322,600 in 9M 2024), with gross margins rising to 64% and 52% respectively.
• General and administrative expenses surged to $5,995,012 for Q3 2025 (from $1,486,362 in Q3 2024) and $9,760,202 for 9M 2025 (from $7,192,001 in 9M 2024), mainly due to professional fees related to the Nusatrip Group IPO.
• Net cash used in operating activities for the nine months ended September 30, 2025, was $22,521,547, a substantial increase from $1,178,148 in 2024.
• Net cash provided by financing activities for the nine months ended September 30, 2025, was $21,650,885, largely from the Nusatrip IPO and other equity offerings.
• Stockholders' equity improved from a deficit of $2,412,705 as of December 31, 2024, to a positive $13,331,496 as of September 30, 2025, primarily due to the subsidiary IPO and subsequent public offerings.
• The company disposed of two subsidiaries, Gorilla Networks Pte Ltd and Gorilla Networks (VN) LLC, to common shareholders for $1 on August 1, 2025, as part of a business restructuring.

Sentiment

Score: 3

Explanation: The company shows significant financial challenges with widening net losses and high cash burn from operations, despite improved gross margins and successful capital raises. The 'going concern' doubt and ineffective internal controls are major concerns, overshadowing the positive capital raises and strategic refocusing.

Positives

• Gross income increased significantly for both the three-month period ($887,340 vs $365,646) and nine-month period ($2,766,025 vs $1,322,600) ended September 30, 2025.
• Gross income margin improved substantially to 64% for Q3 2025 (from 22% in Q3 2024) and 52% for 9M 2025 (from 25% in 9M 2024), driven by higher profit margins in the digital marketing business.
• Online ticketing and reservation revenue increased significantly for the nine-month period to $1,287,769 (from $650,480 in 2024) due to new vendor partnerships and competitive pricing.
• Stockholders' equity improved from a deficit of $2,412,705 at December 31, 2024, to a positive $13,331,496 at September 30, 2025, largely due to successful capital raises through subsidiary IPOs and offerings.
• Other income, net, saw a substantial increase for the nine-month period to $757,018 (from $114,715 in 2024), primarily from the waiver of long overdue refund payables.

Negatives

• Net loss attributable to Society Pass Incorporated widened significantly to $5,118,989 for Q3 2025 (from $1,377,885 in Q3 2024) and to $6,481,069 for 9M 2025 (from $6,156,153 in 9M 2024).
• Total revenue for the three months ended September 30, 2025, decreased by 17.6% to $1,380,382 from $1,675,894 in the prior year, mainly due to a drop in digital marketing revenue.
• Digital marketing revenue decreased for both the three-month and nine-month periods, attributed to a drop in MCN viewer revenue and fewer awarded premium contracts.
• General and administrative expenses increased dramatically by 303% for Q3 2025 to $5,995,012 and by 35.7% for 9M 2025 to $9,760,202, primarily due to professional fees related to the Nusatrip Group IPO.
• Net cash used in operating activities for the nine months ended September 30, 2025, was $22,521,547, indicating a high burn rate and reliance on financing activities.
• The company's disclosure controls and procedures were deemed 'not effective at the reasonable assurance level' by management.
• Ongoing litigation includes a judgment against the company for $1,082,078.91 in the Rahul Narain case, which was bonded, and a partial summary judgment in the Thomas O'Connor case for 1,148 shares of common stock, with value yet to be determined.

Risks

• The company has suffered a net loss of $6,574,023 and has an accumulated deficit of $116,607,896 as of September 30, 2025, raising substantial doubt about its ability to continue as a going concern.
• Reliance on cash generated through financing from public or private offerings by the parent company or its subsidiaries to finance operations and future acquisitions.
• Exposure to foreign exchange risk due to operations in multiple countries (Vietnam, Singapore, India, Philippines, Thailand, Malaysia, Indonesia, China, Hong Kong) with revenues and costs denominated in local currencies.
• Economic and political risks in operating jurisdictions, particularly Vietnam and India, which may influence business, financial condition, and results of operations.
• Ongoing litigation with former employees (Rahul Narain and Thomas O'Connor) and a third-party entity (Yeah1) could result in material adverse effects on financial condition if defense is unsuccessful.
• The company's disclosure controls and procedures are not effective, which could lead to undetected control issues or fraud.

Future Outlook

The company intends to continue pursuing business growth in digital marketing and online ticketing and reservations by engaging more vendors and customers to maximize sales volume and margin, alongside continuous cost control. It also plans to monitor its capital structure and operating plans, evaluating potential funding alternatives to finance business development, general and administrative expenses, and growth strategy. The company believes it has sufficient liquidity for at least one year.

Management Comments

• Management believes that it will be able to continue to grow the Company's revenue base and control expenditures, though there is no assurance this will be achieved.
• The company continually monitors its capital structure and operating plans and evaluates various potential funding alternatives that may be needed to finance business development activities, general and administrative expenses, and growth strategy.
• We expect to continue to rely on cash generated through financing from public offerings or private offerings by our parent company or one or more of our subsidiaries, to finance our operations and future acquisitions.
• Management does not believe, based upon information available, that current legal matters will have a material adverse effect on the Company's financial position, results of operations or cash flows, but acknowledges no assurance can be given.

Industry Context

Society Pass operates in the dynamic Southeast Asian e-commerce, digital marketing, and travel sectors, characterized by rapid digital adoption and intense competition. The company's strategy of acquiring and integrating diverse platforms aims to build a comprehensive digital ecosystem and loyalty platform. The reported decrease in digital marketing revenue, particularly from MCN viewer revenue and premium contracts, suggests challenges in a competitive advertising landscape, while growth in online ticketing and reservations indicates potential in the post-pandemic travel recovery. The divestiture of certain food delivery and local mobile data operations reflects a strategic refocusing within its portfolio, aligning with broader industry trends of specialization and efficiency in high-growth markets.

Comparison to Industry Standards

• The company's gross margin improvement to 64% (Q3 2025) and 52% (9M 2025) is a positive indicator, potentially outperforming some competitors in the digital marketing and online ticketing sectors, which often operate with thinner margins due to intense competition and platform fees.
• The significant increase in General and Administrative expenses, particularly due to professional fees for the Nusatrip Group IPO, suggests a high cost associated with M&A and public market activities, which can be common for growth-by-acquisition strategies but needs to be managed to avoid excessive dilution or cash burn compared to more organically growing peers.
• The substantial net cash used in operating activities ($22.5 million for 9M 2025) indicates a high cash burn rate, which is typical for early-stage or rapidly expanding technology companies in competitive markets like Southeast Asia, but requires continuous capital infusion, similar to other venture-backed or newly public tech firms in the region.
• The successful IPO of Nusatrip Incorporated, raising approximately $15 million, demonstrates the company's ability to leverage its portfolio assets for capital generation, a strategy employed by larger conglomerates or holding companies to fund further expansion or reduce parent company debt.

Corporate Governance

Legal Proceedings

• Rahul Narain case: A former employee claims entitlement to compensation and bonus. The Court denied the company's motion for summary judgment and granted Mr. Narain's motion for partial summary judgment, resulting in a judgment of $1,082,078.91 against the company (bonded). The company has appealed and filed a motion to reargue.
• Thomas O'Connor case: A former employee claims entitlement to salary payments, expense reimbursement, and damages for undelivered common stock. The Court granted a partial summary judgment, deciding Mr. O'Connor validly exercised 1,148 shares under a warrant, with the value to be determined. The company has appealed this grant.
• CVO Advisors Pte. Ltd. claim: Part of the Thomas O'Connor action, alleging entitlement to $8,000,000 worth of Series A Preferred Stock. CVO's motion for summary judgment was denied.
• Company vs. Narain, O'Connor, and Growth Hero: The company commenced an action alleging misappropriation of intellectual property and other torts. Rahul Narain's motion to dismiss was granted, as the claims were deemed the same as counterclaims in his lawsuit against the company.
• Yeah1 litigation payables: $818,353 arose from a final arbitration award against Adactive Media, Inc., Adactive Media CA, Inc., and Thoughtful (Thailand) Co., Ltd., ordering payment for legal fees and costs.

Related Party Transactions

• Amounts due to related parties (two officers) totaled $10,230 as of September 30, 2025, which are unsecured, interest-free, and have no fixed repayment terms.
• The company paid key management personnel total salaries of $187,500 for Q3 2025 and $562,500 for 9M 2025.
• The company issued 160,000 shares of common stock to key management personnel for an incentive of $199,200 during Q3 and 9M 2025.
• A subsidiary paid one officer total professional fees of $1,788 for Q3 2025 and $5,372 for 9M 2025.
• The company disposed of two subsidiaries, Gorilla Networks Pte Ltd and Gorilla Networks (VN) LLC, to its common shareholders for a consideration of $1 on August 1, 2025.

Stakeholder Impact

• Shareholders: Experience significant dilution from ongoing capital raises (ATM, convertible notes, subsidiary IPOs) and face increased net losses, but also benefit from the improved stockholders' equity position and strategic refocusing efforts.
• Employees: Continue to receive stock-based compensation, with 837,495 shares issued to employees for compensation during 9M 2025. Pension contributions are ongoing.
• Customers: May see changes in service offerings due to the cessation of online F&B and groceries delivery and restructuring of telecommunication services, but potentially benefit from enhanced online ticketing and digital marketing services.
• Creditors: The company's 'going concern' doubt and high cash burn rate could be a concern, though recent capital raises have improved overall liquidity and stockholders' equity.
• Management: Faces increased scrutiny due to widening net losses, high G&A expenses, and the conclusion that disclosure controls are not effective. Also involved in multiple legal proceedings.

Next Steps

• Continue pursuing business growth in digital marketing and online ticketing and reservations by engaging more vendors and customers.
• Implement continuous improvement in cost control across all segments.
• Monitor capital structure and operating plans, evaluating potential funding alternatives.
• Continue to defend vigorously against ongoing litigations with former employees.
• Address the identified ineffectiveness of disclosure controls and procedures.

Key Dates

Recommendation

The company presents a mixed financial picture. While gross margins have significantly improved and successful capital raises have bolstered stockholders' equity, the widening net losses, substantial cash burn from operations, and the acknowledged ineffectiveness of disclosure controls are significant concerns. The ongoing litigations also pose an unquantifiable risk. The strategic refocusing and capital raises provide some stability and potential for future growth, but the current operational losses and governance issues suggest a 'hold' recommendation. Investors should monitor the effectiveness of internal controls, the outcome of legal proceedings, and the company's ability to translate improved gross margins into overall profitability before considering further investment.

Keywords

E-commerce, Southeast Asia, Digital Marketing, Online Travel Agency, Financing, Net Loss, Gross Margin, SEC Filing, 10-Q, Nusatrip, Society Pass, SOPA