SRIVARU Holding Limited Provides Detailed Update on Legal Claim by Sabby Volatility Warrant Master Fund Ltd.
SRIVARU Holding Limited has been made aware of a legal claim filed against it by Sabby Volatility Warrant Master Fund Ltd. in the Supreme Court of the State of New York, under Index No. 650870/2025. The Company, committed to transparency, compliance, and the protection of shareholder value, intends to rigorously defend itself against these allegations.
The claim by Sabby centers around a disagreement over the exercise calculations of warrants previously issued by the Company. While SRIVARU Limited maintains that its methodology is in full compliance with its contractual obligations and industry standards, Sabby asserts that it is entitled to additional shares and financial compensation. This legal dispute has the potential to impact investor sentiment and market dynamics, making it a matter of significant importance for all stakeholders involved.
Background on Sabby’s Investment and Warrant Structure On October 31, 2024, Sabby purchased a total of 16,800,000 units from SRIVARU. Each unit consisted of one common share and one warrant. The warrants issued as part of this transaction included a cashless conversion provision. This provision allowed warrant holders to receive two shares per warrant upon exercise, effectively enabling conversion without requiring additional capital investment.
Sabby’s claim is based on a calculation discrepancy concerning the exercise price of these warrants. According to the Company’s documented and publicly disclosed methodology, the effective exercise price was $0.096 per share. However, an alternative interpretation of the provision suggests that the conversion could have been executed at a price of $0, effectively eliminating the cost of conversion. This discrepancy has led to the current legal dispute between the parties.
Impact of Share Combination and Reverse Split on Warrant Holdings Prior to a share combination (reverse stock split) initiated by the Company, Sabby had exercised a portion of its warrants. Specifically, it had exercised 13,180,839 warrants, which resulted in the issuance of 26,361,678 shares. As per an email confirmation from Sabby, the firm had 3,619,161 warrants remaining as of January 16, 2025.
To maintain compliance with stock exchange requirements and improve market stability, SRIVARU implemented a 50:1 reverse stock split. The purpose of this move was to bring the Company’s share price above the $1 threshold. As a result, Sabby’s remaining 3,619,161 warrants were adjusted accordingly. Under the new post-split structure, these warrants were converted into 72,383 warrants (calculated as 3,619,161 warrants divided by the 50:1 split ratio). Under the cashless exercise terms, these 72,383 warrants entitled Sabby to receive 144,766 post-split shares.
Sabby, however, has disputed this calculation, asserting that it should have received 989,576 post-split shares. This figure represents an approximate 583% increase over the Company’s calculation. SRIVARU firmly disputes Sabby’s interpretation, arguing that the cashless exercise mechanism does not support such an adjustment and that its calculations were conducted in strict accordance with contractual agreements and industry practices.
Sabby’s Legal Claims and Financial Demands Sabby contends that it is entitled to financial compensation for alleged damages incurred due to the Company’s handling of the warrant exercise process. Specifically, Sabby’s claim states:
- The Company owes liquidated damages, calculated under Section 2(d) of the Warrants, amounting to approximately $350,000. Furthermore, these damages will continue to accrue at an estimated rate of $120,000 per week until the disputed shares are delivered.
- Under Section 5(e) of the Warrants, Sabby is also seeking reimbursement for attorneys’ fees.
- Sabby estimates total damages to be around $850,000, based on the value of the shares it claims it was entitled to receive but did not.
SRIVARU disputes these claims and asserts that all necessary disclosures regarding authorized shares and capital structures were made at the time of the offering. Additionally, the Company notes that neither Sabby nor the underwriters raised concerns about the sufficiency of authorized capital before the offering took place. As a result, SRIVARU had no obligation to modify its authorized capital structure.
Pre-Selling Allegations and Market Impact A particularly contentious aspect of this legal dispute is the allegation that Sabby engaged in pre-selling stock during the period in which it was seeking additional shares and exercising warrants. Specifically, between January 15 and January 18, 2025, Sabby allegedly sold shares in advance of their issuance.
In an email sent by Sabby’s legal counsel on January 20, 2025, Sabby explicitly acknowledged that it had already sold shares before receiving them and requested that SRIVARU deliver shares to cover its trading activities. This practice, if proven, could expose the Company to significant market risks, including “buy-in” protection requirements, which can create instability and volatility in stock prices.
Furthermore, the Company has observed substantial stock price and volume fluctuations during this period, potentially linked to these activities. The exercise of large quantities of warrants and simultaneous short-selling by Sabby likely contributed to downward pressure on SRIVARU’s stock price, exacerbating market distortions.
Company’s Response and Legal Strategy SRIVARU Holding Limited is actively defending itself against this lawsuit and evaluating all available legal remedies. The Company remains committed to the following strategic priorities:
- Vigorous Legal Defense: The Company is working with experienced legal counsel to ensure a robust defense against Sabby’s claims. SRIVARU believes that its calculations and handling of the warrant exercises were legally and contractually sound.
- Operational Stability and Growth: Despite the ongoing legal dispute, SRIVARU remains focused on executing its business plan, particularly in the growing electric two-wheeler mobility sector. The Company continues to expand its operations to deliver long-term value for shareholders.
- Market Oversight and Transparency: SRIVARU is monitoring stock market activity to assess the impact of warrant exercises and short-selling practices on share price volatility. The Company is also working to enhance transparency with investors regarding these developments.
- Regulatory and Compliance Measures: The Company is engaging with legal and regulatory advisors to ensure compliance with all contractual obligations while safeguarding shareholder value. As part of this effort, SRIVARU is reviewing its warrant agreements and corporate governance policies to mitigate future risks.
