A couple of months ago, I posted about the case of Cannon v. Romeo Systems, where the CEO and sole director of a startup failed to notice an edit in a stock warrant that ultimately guaranteed the holder far more shares in his company than he had expected, with disastrous consequences. Mostly, it’s a tale of sloppiness; he signed a contract without reviewing it for changes, and then – when warned by KPMG of discrepancies between his own cap table and the terms of the warrant – ignored it. Negligent, perhaps, but understandable.

Unfortunately, as the case continues, our CEO seems to have … learned very little.

The CEO is appealing the decision, and under Delaware law, if he wants to stay the judgment, he has to post security for the full amount awarded to the plaintiff, which is over $27 million. He petitioned to be permitted to post not in cash, but in private company stock – a completely different private company than the one in the original dispute, and one for which he also serves as Chair and CEO. But, of course, in order to use private company stock, he had to provide evidence of its value. Here is what VC Fioravanti found:

First, there was a discrepancy between the CEO’s representations as to his percentage ownership of the company, and the cap table submitted in support of his petition.

Second, the CEO miscalculated the implied valuation of the company based on its latest funding round – twice.

Third, the CEO’s implied valuation based on the funding round left out – wait for it – warrants that investors received for additional stock purchases.

I mean … maybe this is just a recurring problem with private companies but, oof, the optics for the appeal.