Quote from parmenides on October 17, 2023, 11:14 am

Open Letter to John Iliopoulos

Tell Shareholders the Truth

This letter is in response to the “Important Update to Shareholders – Developments in 2023”, in which you profess a commitment to “providing transparent and timely updates”.

On the contrary, you continue to deliberately withhold critical information from shareholders about the true financial position of e-Mersion (Australia and UK companies). This open letter is in the interest of transparency to all shareholders.

More than $4 million in liabilities and virtually no revenue.

I became a shareholder in September 2022, injecting considerable funds. Given my background I was asked to take on a role in e-Mersion in December 2022, and conducted an Operational and Financial Review (resulting in the attached reports). This review commenced in January 2023 and by March 2023 uncovered the diabolical state of the company’s financial position. In early March total liabilities were estimated to be around $2.8 million, but this did not include many invoices that were not documented in the accounts, and by June 2023, estimated liabilities were around $4.5 million. This includes:

Over $1 million in unpaid PAYG Income Tax and Superannuation

I have repeatedly argued that there was a duty by the Directors (you, your brother Chris, and Peter Stern) to inform all shareholders of e-Mersion’s financial position. Despite this, you have continued to withhold this information. The attached reports also reveal wasteful expenditure of our hard-earned saving, including:

Over $1 million spent on business class travel, luxury accommodation and fine dining.

The attached report and chronology of events present factual information and not the misleading hype that you continue to circulate to shareholders.

You had an opportunity in this latest “important update” to provide a honest and frank update, but instead you have chosen to continue a false narrative, propagating conspiracies and shifting blame to others. 

I now address several of the items in your update (using the same heading) and provide some facts that you conveniently exclude because it does not suit your false narrative.

Post-FIFA World Cup Restructuring

There was no restructuring. Staff resigned because e-Mersion was continually late in paying wages, after which staff discovered that you had not been paying their superannuation entitlements.

By the end of December 2022, e-Mersion had run out of cash and could not pay staff salaries. You and Chris approached me and other shareholders for a short-term loan to cover salaries with a promise to repay the money in February 2023 (at which time you would receive funds from a property settlement). $100,000 was deposited into the e-M account on 31 Dec to pay staff salaries. To my horror, I later discovered that you used this money to pay yourself and Chris wages. Worse still, you did not repay the $100,000 as promised and the money remains unpaid. Letters of demand for repayment have been ignored.

Over the course of January and February, debtors were demanding payment of outstanding invoices and in early March, we discovered that you and Chris had been concealing millions of dollars in liabilities. Chris subsequently took leave – for all of March and April – and you both began referring creditors to the (then) Chairman, Peter Stern, knowing very well that he did not have an operational role. You and Chris effectively abandoned the company and went into hiding.

A small group of shareholders continued to pay staff salaries, to avoid liquidation. Rather than thanking them for injecting cash into the business, you sent abusive emails wanting to know why your brother Chris had not been paid, threatening to report this to the Fair Work Ombudsman. 

To depict staff resignations as deliberate restructuring, which implies cost-efficiencies, is false and misleading.

Board Disruption

Your claim that a group of shareholders attempted to remove you and Chris as directors is a lie.

After we discovered you had been deliberately hiding e-Mersion’s liabilities, several shareholders organised a meeting with you and Chris to try and work out a plan to save the company from liquidation. Your behaviour at that video meeting was appalling and you refused to take responsibility for the liabilities or the extravagant expenditure.

At this meeting, you were asked if these liabilities had been disclosed to Gooroo and you were emphatic that you had done so. A meeting was called with Gooroo the following day, and it became clear that you had not disclosed the liabilities, and Gooroo put the merger on hold.

It was at that meeting that a Gooroo representative suggested Chris resigns from the Board and as COO. You and Chris agreed to this, and your attempt to reframe this as some sort of forced resignation is ridiculous. Your claim that a “coalition” of shareholders tried to remove you is patently false.

You also claim that this “coalition” failed to deliver a “rescue package” – another distortion of the facts. The truth is that Peter Stern and I met with Gooroo representatives, and we collectively agreed to try and raise capital to save e-Mersion and our investments. You and Chris were absent for all of March and April and we worked with Gooroo to try and raise capital. The objective was to raise around $3.5 million to pay some liabilities and have enough cash for a 12-month runway. It was agreed that no funds would be deposited until a total of $3.5 million was committed.

The key message from prospective investors was that, in this phase of a company’s evolution, new capital should be used to drive growth, not pay down liabilities caused by poor commercial contracts, poor management and profligate expenditure. The inability to raise capital is due to the liabilities you have amassed over several years, and the absence of any notable revenue.

FIFA World Cup Qatar 2022 Digital Magazine

The Google suspension was not the cause of the failure of the FIFA World Cup project. What about Apple? There was no suspension on the App Store – so where is the revenue and the promised millions of downloads from that segment of the market? There was in fact no revenue associated with a free download of these magazines, and the losses reflect poor commercial terms and nothing else.

Your November 2022 announcement that e-Mersion had been “appointed” by FIFA was misleading because it failed to disclose that FIFA was not paying e-Mersion, but that e-Mersion was paying FIFA.

e-Mersion pays FIFA $1 million USD in license fees and marketing expenditure

In addition, e-Mersion had to pay writers, editors, etc. to produce the magazines, and pay for printing costs. This is the opposite of what e-Mersion is supposed to be doing, which is to get paid for an innovative platform and replace paper printing.

The November announcement claims to provide a digital solution and help FIFA achieve its sustainability objectives, and yet the only revenue in the FIFA contract was from the sale of printed magazines.

$160,000 12-month lease of a 4-bedroom Luxury Villa in Doha (May 2022 – April 2023)

In addition to these poor commercial terms, you and Chris spent hundreds of thousands on travel to and from Qatar over the 18 months to December 2023. I understand you stayed at the Villa again with your family in March/April 2023.

Please explain why a 12-month lease in your personal name was paid for by e-Mersion.

Media Services Agreement with Attnd Media Limited

You have announced a “strategic Media Services Agreement” with Attnd Media to manage the F1 contract.

A search of company records reveals that Attnd Media Limited was registered in the UK just 4 weeks ago, with a single shareholder – Hedy Capital Limited, which itself was registered just 4 weeks prior to Attnd Media’s registration.

You had claimed back in April that you were in advanced discussions with Hedy Capital (an Australian company) for an investment in e-Mersion, and touted Jag Sangha as the next CEO of e-Mersion. Instead of an investment, these new companies have been established in the UK to manage the F1 contract, and notably Jag Sangha is a Director of Attnd Media Limited.

In addition, attnd.ai has been registered and a LinkedIn profile claims that “attnd.ai is an AI driven publishing and technology platform that connects the worlds most iconic brands, events and experiences to a global audience… We create unique opportunities and technologies for brands and consumers that engage and excite with immersive content and experiences”.

It appears that e-Mersion’s platform has been transferred to another entity.

Given the poor commercial terms of most other contracts you have negotiated, and as a concerned shareholder, I demand a copy of these agreements and full disclosure of the rationale for establishing new entities wholly owned by a third party, rather than them investing in e-Mersion.

F1 Race Program Reinstatement

You claim the F1 contract has been reinstated following a “suspension” for 6 races, but the fact is that e-Mersion was not suspended.

F1 magazine not produced because e-Mersion could not pay its liabilities

F1 license fees for 2022 and 2023 remained unpaid and contractors (editor, writers, art directors etc) required to produce the magazine effectively went on strike because you had not paid them for work done on the FIFA magazine and previous F1 editions.

Like the FIFA contract, you have failed to disclose the true commercial terms of the F1 contract which costs e-Mersion around $1.4 million per year in F1 license fees and editorial costs.

$2.7 million in ad sales required just to break-even

At break-even point, F1 will have made over $2 million in profit from e-Mersion license fees and ad revenue share. You have managed the F1 contract for two years and have failed to generate any notable advertising revenue in that time.

I estimate that we, as shareholders, have paid around $3 million to develop the F1 app ecosystem, and you have now facilitated the establishment of a new company to whom you seem to have transferred these rights. They will now monetise it and reap the rewards of all this work and investment. Isn’t this what you have been paid for all these years. What is our return on this investment?

Former Staff Fair-Work Commission

Your claim that a Fair Work case was dismissed is misleading. The Fair Work case you refer to was a bullying in the workplace action made against you by a former employee. The investigation was not dismissed, but rather is no longer active because the employee resigned.

Your update fails to disclose that e-Mersion has been reported to Fair Work for unpaid wages, which is an ongoing investigation. I understand that staff have also made claims to the ATO for unpaid superannuation – which could result in fines.

Your unwillingness to pay wages and staff entitlements exposed e-Mersion to risk and your claims of employee breaches is yet another attempt to deflect blame and no excuse for not paying entitlements.

Rights Issue Offering

This statement is ambiguous and suggests that you are proposing to address the liquidity crisis by further diluting our shares. You claim to have injected $750,000 yet fail to acknowledge the hundreds of thousands of dollars paid by a small group of shareholders earlier this year to stave off insolvency.

Rather than loan the company money, why don’t you repay the $450,000 bonuses you paid yourself and Chris in November 2022? How about repaying the over $4 million dollars in bonus and share options paid to the three directors over the last few years?

Concluding Remarks

Contrary to your assertions, you have neither been transparent nor provided timely updates. The company has effectively been trading insolvent since January, and arguable for all of 2022.

After receiving complaints from staff, I am aware that a reporter is investigating e-Mersion for alleged wage theft, unpaid superannuation, alleged bullying, and defamation. I was contacted by a reporter but declined to be interviewed. I assume that the timing of your update, and the false narrative it contains, is a pre-emptive strike to deflect some of the allegations that are likely to emerge from that article, should it indeed be published.

In conclusion, I see that you have no other choice but to do the following:

1. Call a shareholder meeting without delay, to include an agenda item for a spill of all director positions and election of a new board
2. Provide detailed documentation relating to the Attnd Media and Hedy Capital commercial arrangements
3. Not engage in any further commercial arrangements until a shareholder meeting has taken place.

I would be happy to speak to attached summary report at the shareholders meeting.

Rick T. Papadopoulos

Shareholder