Australian cognitive computing start-up, Semantic Software Asia Pacific, has been told to compensate investors following a legal stoush that saw the company come under fire from shareholders over the continued absence of promised returns.
In a case heard in the NSW Supreme Court during February, two investors in the company, the trustees for the Ebbsfleet Superannuation Fund and the McGee Superannuation Fund, alleged that Semantic Software had breached the terms of an agreement promising to triple share value within two years of issue.
The Sydney-based company at the centre of the case started developing its semantic computing technology – a field of computing that combines elements of semantic analysis, natural language processing, and data mining – in 2012.
By 2013, the organisation had begun building its platform of data interoperability products that collect data, transform it for syntactic and semantic interoperability, and store it in graph databases for advanced analysis.
The company has since built its platform which, is comprised of several suites, two of which were released to the global market in 2016 with a plan to roll-out more suites in 2017, according to a statement on its website.
The platform is aimed at acting as a computerised research assistant to doctors, data scientists, and analysts.
The company’s go-to-market strategy involves targeting government departments, medical researchers and health informatics professionals, legal and financial institutions, and data analytics companies within Australia.
In addition, the company said on its website that it expected to announce a global distribution partnership in early 2016.
However, promises to investors made while the company was raising funds to pursue the research and development involved in the creation of its platform have been thrown into question, following the continued absence of returns on investment.
In a Judgement document published on 15 February, Justice James Stevenson, who heard the case, said that the investors were entitled to compensation by Semantic Software.
“Plaintiffs entitled to damages for breach of warranty that shares in first defendant would triple in value within two years of issue and by damage suffered by reliance on representation to same effect made without reasonable grounds and thus misleading,” the Judgement stated.
The dispute stems from share issue agreements struck between the company and two investors who, via their superannuation funds, Ebbsfleet and McGee, subscribed to a combined 6.5 million shares in Semantic Software, at $0.25 each, worth a total of $1.63 million at the time.
“Ebbsfleet and McGee claim that Semantic and Mr Bradley are in breach of a promise made in each of the Share Issue Agreements that the shares for which they subscribed in Semantic would triple in value within two years of issue,” Stevenson said in the judgement document.
“Ebbbsfleet and McGee claim that far from the shares having tripled in value, they were after two years, and still are, almost worthless.
“In my opinion, Ebbsfleet and McGee have made out both of these claims and are entitled to damages accordingly,” he said.