In a worrying trend for the Australian business landscape, thousands of companies have vanished over the past year, and experts warn that the situation is poised to deteriorate even further.
Among the casualties is E-Mersion Media, a Melbourne-based tech start-up that recently went into liquidation with debts exceeding $12 million. The liquidator's report reveals that the company has been operating at a loss since its launch.
E-Mersion Media aimed to revolutionize the industry by digitizing traditional print magazines but managed only to secure four sales during its four years of operation, totaling a mere $84,274 in revenue. The business did receive a $200,000 JobKeeper grant to support its staff during the COVID-19 pandemic, but that was the extent of its income from its inception until liquidation in April.
Since 2020, the company accrued losses amounting to $12.6 million, according to the statutory report filed with the Australian Securities and Investments Commission (ASIC). The sole director, John Iliopoulos, was at the helm while the company attracted approximately $12 million in investments from around 50 investors, predominantly everyday Australians—funds they are unlikely to see again.
Mathew Gollant, the liquidator from CJG Advisory, has taken action against E-Mersion's UK entity to recover $1.48 million. The start-up burned through its funds due to significant liabilities related to staff wages, legal fees, software and travel expenses.
Criticism from investors has mounted over the company's lavish expenditures, which included more than $1 million in business class flights, luxury accommodations, fine dining, and personal indulgences like spas and massages. Notably, a high-profile trip involved consultants residing in a villa in Doha for nearly $100,000 over one year.
According to the report to ASIC, staff are owed a total of $255,000 in unpaid employee entitlements, with around $149,000 of that amount being overdue superannuation contributions. Many employees departed en masse last June due to unpaid wages, while some are still awaiting their final payments after resigning and may qualify for compensation through government support schemes. Sadly, superannuation contributions are not covered under this assistance.
Last year, Iliopoulos had asserted to news.com.au that the company was solvent and maintained that all wages were up to date, though he acknowledged issues with generating revenue. “There are a lot of mistakes as to why we’re not making revenue,” he admitted. “Some things don’t work out as planned.
Source News.com.au