Half the staff at an embattled Australian start-up have quit, amid legal disputes and criticism of some of the company’s business expenses.
E-Mersion Media, based in Melbourne and with a subsidiary in the UK, captured investors’ interest with its “innovative” idea of digitising traditional print magazines, and had landed big deals with FIFA and F1 to produce their programmes.
Its technology made the text come alive and it also had interactive elements on the page. The business had attracted about $12 million from about 50 investors.
But despite its enviable product, E-Mersion Media’s workforce has now dwindled to half its original size, from 16 employees to eight, including resignations from senior leadership positions. Some investors have raised concerns.
Several staff claim they are owed tens of thousands of dollars from unpaid wages.
They claim E-Mersion Media held crisis meetings on some occasions when the pay run was due as wages arrived late and at times not at all, leaving some employees struggling to pay rent and other living expenses, which the company has denied.
Staff were further upset when they read an internal report which found that E-Mersion Media spent more than $1 million on travel expenses over the past three years, including more than $100,000 for a year-long stay at a luxury villa in Doha, all while they claim their wages remain outstanding.
John Iliopoulos, E-Mersion Media managing director, says the company denies claims that one employee was in tears in these crisis meetings, pleading for her salary to be paid as she had fallen behind on rent.
Mr Iliopoulos said the company has ensured all wages are up to date with the exception of three employees whose pay was withheld over serious misconduct allegations, including a claim that $15,000 was spent on a company UberEats account.
He claimed police have been involved.
“Staff have all received their wages, except the few that have opened an investigation into breaches of conduct. Part of that investigation includes (alleged) theft and fraud,” Mr Iliopoulos told news.com.au.
Some employees news.com.au has spoken to are not accused of wrongdoing but still believe they are owed money. Those that have been accused say they need more clarity on what the allegations are and have not been contacted by police.
Mr Iliopoulos said the Fair Work Ombudsman (FWO) had contacted E-Mersion Media about one case of non-payment but said it had been dismissed.
Following this conversation, the FWO confirmed an investigation was still underway. News.com.au understands several claims have been lodged and that they are all denied by E-Mersion Media.
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Jeremy* worked at E-Mersion for a few years but said he was driven to resign in June after months of his wages arriving late and then finally not at all.
“It was December last year it all started going downhill,” he recalled to news.com.au.
Other E-Mersion Media employees have also been driven out the door over alleged non-payments during the June period.
There was Gemma*, who struggled to pay her day-to-day living costs because of the wages she claims she is owed.
She claims that delays and non-payments “posed a lot of difficulties, sometimes to my rent, sometimes my electrical bills, I would walk around without internet”.
Tyson*, another employee, said he believes his resignation was seen as “a Judas disloyalty thing” and added that “I didn’t get a single payment after I resigned”.
Two weeks into his notice period, Tyson alleges that the company accused him of “serious misconduct” and suspended him without pay.
He claims he was not provided with any detail or information relating to any allegation.
“The next week they came back threatening legal action,” he added.
Tyson ended up engaging a solicitor but the dispute is ongoing in relation to his notice period.
Another employee, Rafael*, alleges he was also suspended without pay over misconduct allegations, of which he was not given any further details.
“I was a little bit taken aback,” Rafael said. “I was actually quite fearful.”
Indeed, an internal report news.com.au has obtained, prepared independently after the author was given access to E-Mersion Media’s Xero accounting records to prepare for the company’s board, appears to provide some corroboration of claims from employees.
The report states that: “For some staff, accusations of misconduct were made during their notice period and salary payments withheld.
“Other staff had salaries withheld during their notice period without explanation.”
E-Mersion Media criticised over travel expenses
This same internal report claimed that more than $1 million has been spent on travel expenses over the past three years, including “businesses (sic) class airfares, luxury accommodation, fine dining, alcohol, spas and balinese (sic) massages”.
That also included more than $100,000 for a year-long stay at a luxury villa in Doha, Qatar’s capital, for company representatives such as consultants during the FIFA World Cup in the hopes of attracting big investors, which did not eventuate.
Mr Iliopoulos said E-Mersion Media was solvent but accepted it had a revenue problem.
“There are a lot of mistakes of why we’re not making revenue,” he said. “Some things don’t work out to plan.”
In relation to the large chunks of money spent on overseas travel and accommodation, he said that was a necessary business expense.
“It’s just part of our business. We’re an Australian company, all our contracts are based overseas,” he explained.
“It would have been way more expensive to book individual hotels for a month. It did work out cheaper to book it (the villa) for the year. We continued to negotiate deals in Qatar, I don’t think it was a waste of money.”
Bad luck charm
The collapse of other major deals has also put pressure on E-Mersion Media as some investors get cold feet.
One staff member who preferred to remain anonymous described the process of creating FIFA’s World Cup Magazine as “a complete debacle”.
“It was really one of the toughest periods in my life,” they said, adding that E-Mersion Media was “so desperate” to land the deal that they offered to write and design the match programme, which the staff member believes went beyond the company’s capabilities.
“FIFA was a real mess for us, they landed the contract two days beforehand, a lot of the team were close to burning out. It was all kind of at the 11th hour, it was so painful,” they added.
News.com.au contacted FIFA for comment.
Harry Manaras, who invested $13,000 into the venture a year ago, said he wants more information from the company regarding his investment.
“I don’t have $13,000 to spare, that’s for sure. In one respect I am slightly concerned,” Mr Manaras said.
He claims he was told the company “was supposedly about to explode with FIFA” and become a major player in its field.
But in an update to shareholders sent out in late September, investors learned that things had taken an unfortunate turn.
“Without notice or warning, the e-Mersion Media App was suspended by Google based on a claim (that has proven to be false) that eMersion Media was infringing FIFA’s intellectual property rights,” the update read.
“e-Mersion Media has made a claim on its policy of insurance and are currently awaiting settlement while maintaining indemnification.”
And in another stroke of bad luck, E-Mersion Media missed out on a multimillion dollar deal after its plans to merge with a previously ASX-listed company fell apart.
In February, E-Mersion was set to merge with Gooroo Ventures Limited, an AI marketing company that has been in a trading halt since 2019.
This was expected to net E-Mersion somewhere in the vicinity of $6 million or $7 million in additional capital, but this did not end up going ahead.
“We continue our discussions with the Board of Gooroo,” E-Mersion shareholders were informed in September.
‘Rogue investors’
Investors remain impressed with the company’s technology and potential, but have raised concerns over the handling of some projects.
Mr Iliopoulos said certain aspects of the business was “potentially poorly managed”.
Several shareholders and former staff tried to replace the board after the Gooroo deal fell through.
“It’s been a tough challenging time,” Mr Iliopoulos said. “I’m trying to save this business from rogue shareholders trying to change the board”.
In an open letter to investors news.com.au has obtained, one person described themselves as a “concerned shareholder” and said they had been part of the coup to change the board as they were concerned the company might go into liquidation.
“I became a shareholder in September 2022, injecting considerable funds,” they wrote.
They wrote that the business losses “reflect poor commercial terms” and demanded greater transparency for investors.
‘Our product is amazing’
Paul White, another investor, is still a big advocate of E-Mersion’s technology. “You don’t land FIFA and Formula 1 if the product is crap,” he told news.com.au.
“Yes our product is amazing,” Mr Iliopoulos agreed. “That’s why we’re signing some of the biggest corporate brands, we’re very proud of it.”
Legal disputes
News.com.au has also obtained court documents which show E-Mersion Media is embroiled in a messy legal case with several investors claiming their shares were transferred to a related entity for no consideration and without their knowledge or consent.
Texm Group Pty Ltd and Pizzo Nominees Pty Ltd took E-Mersion Media to the Victorian Supreme Court over claims the defendant had reduced their share count.
The two businesses alleged they provided $467,361 to Box Media, which was the old name for E-Mersion Media by way of investment.
But they claimed in documents filed with the court that they were removed as shareholders and the money was used for the defendants’ benefit.
A mediation meeting happened at the end of September.
More Coverage
E-Mersion is yet to file a defence but is fighting the claim.
Names withheld over privacy concerns*
alex.turner-cohen@news.com.au
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