On, an enterprise AI startup previously known as GameOn Technology, has laid off all of its estimated 60 staff members after allegedly discovering that $11 million in cash was missing.
On CEO Alex Beckman resigned, allegedly under pressure. A letter to shareholders from other company officers alleged they discovered to their “shock and horror” that only 37 cents was left in an account that was supposed to have $11 million. As GameOn, the company previously said it had raised $35.5 million.
On its website, the company bills itself as “the industry leading enterprise-grade conversational AI platform, trusted by the world’s leading brands in retail, sports, and media & entertainment.”
In a letter that was sent to all shareholders, Beckman left under pressure from the board, and then the board conducted an investigation and discovered many of his representations about the company’s finances and operations turned out to “be abjectly false.”
Lil Snack & GamesBeat
GamesBeat is excited to partner with Lil Snack to have customized games just for our audience! We know as gamers ourselves, this is an exciting way to engage through play with the GamesBeat content you have already come to love. Start playing games now!
Beckman and Kalin Stanojev, chief product officer, founded the company in 2014 as GameOn Technology. But in a letter to shareholders, the company’s board pressured Beckman to resign on July 1. On July 5, the company’s board investigated and concluded the account that should have had $11 million only had 37 cents, according to the letter from Stanojev and another officer named Jon Layman, head of operations.
The letter said the company’s probe of the bank accounts — which had been a subject of consternation for months — revealed that Beckman had used elaborate lies and deception to convince the board and management that On had approximately $11 million in one of its bank accounts.
“This cash was critical to the ongoing operations of the company in which you invested,” the letter said. “To our shock and horror, we discovered that, in reality, the account balance in that bank was only 37 cents. This discovery left the company in a liquidity crisis, and the board and management were forced to act quickly, hoping to stave off bankruptcy.”
After a series of meetings over the weekend, the board and management determined that the company would need to pause operations and lay off nearly all of its workforce on Monday, July 8. The company, at that time, held approximately $550,000 in cash [evidently from other accounts], much of which was deployed to pay for the “sudden terminations.”
California requires same day payout when employees are terminated, so a variety of costs related to those terminations have consumed much of the remaining cash in the company’s bank accounts.
“These events were particularly staggering and heart-breaking to both of us, as we have known Alex Beckman for many years. We never imagined a conclusion to his efforts at ON to result in this type of ending,” the letter said.
Alex Beckman’s response
In an interview, Beckman confirmed with GamesBeat that he left the company in early July. He said he was not in a position to discuss the company’s decision to cease operations.
“From the beginning, I’ve only wanted what’s best for the company and its employees. And I resigned because I believed it was in the best interest of the company. I am aware of a communication describing my departure. That communication contains a number of exaggerations and misstatements and does not paint an accurate picture of what happened,” he said. “I look forward to correcting the record, I’m providing the full story at the appropriate time.”
Beckman said he could not comment on whether there was litigation. He confirmed the company had raised $35.5 million in a couple of rounds, and that it grew to be more than 60 employees. He said he loved the company and this is an “incredibly painful time period.”
In a follow-up message, Beckman also said the following:
From the beginning, I have only wanted what is best for On. During my tenure as CEO, I focused on driving growth, innovation, and value for our investors, employees, and customers. By building an industry-leading, enterprise-grade AI chat platform, we enabled world-class brands to seamlessly power consumer engagement at scale. We started with sports and pushed into new verticals like retail and fashion. It was incredibly exciting to see clients realize the value we could bring when our platform energized their businesses and empowered and accelerated consumer engagement. Our traction was significant and the potential for a platform like On is, and remains, breathtaking.
Ultimately, I resigned because I believed it was in the best interests of the company. It was my decision alone. I am aware of the company’s communication describing my departure. That communication contains a number of exaggerations and misstatements and does not paint an accurate picture of what happened. I understand that there are serious allegations being made, and I take them very seriously. Accordingly, I look forward to correcting the record and providing the full story at the appropriate time.
After my resignation, I was not part of the decision-making process with the board or management about the company’s operations. Questions regarding the specifics are better directed to the company. The news that On was ceasing operations was a surprise and upsetting to me as well, just as I am sure it was a shock to On’s outstanding employees, who had worked so hard, for so long, to make our shared vision a reality. Having been the CEO during a reduction in force, as well as an employee during one, I know they are awful. No one feels like they win. And whether it is a surprise or you see it coming, it still hurts.
I started On with just a few people in a small office in a shared space a decade ago – like so many founders start their journey. On is and was a part of me. I put my blood, sweat, tears, my own money, my family’s money, and so much more into the company. This is not how anybody wanted it to end. And while it is now convenient for the company to point the finger at me, the story is much more complicated than that. Innuendo and thinly veiled accusations insinuating that I personally benefited from any purported financial improprieties are simply false. I look forward to telling the full story.
Alex Beckman
More details from the shareholder letter
Stanojev said in the letter they had a vision of building a platform to support rich, intelligent messaging between brands and consumers. As the platform and the landscape around us evolved, the opportunity to build an amazing product and technology stack in this space only grew.
“It was this passion to build something great that motivated myself, my team, and our product vision. My focus has always revolved entirely around the product, engineering and technology of On,” the letter said.
Stanojev added, “I was never involved in the finance or business operations, and I realize now that the limited information Alex shared with me was largely false.”
Stanojev added, “Much to my regret, I trusted Alex to run the finances and business properly, knowing well that start-ups are never easy and that business friction always exists. I wrongly presumed, however, that Alex would behave in a fair, rational, and honest manner as CEO of On. I expect that as facts related to his management come to light, you will all share my dismay in his actions.”
Layman said in the letter that he joined in February 2024 to help the company mature and prepare itself for a sale and/or a future financing, or, if truly successful, an IPO.
When he joined, he said he knew little of the detailed financial results of the company, other than what was represented to him both verbally and in spreadsheets, by Beckman. Layman said he trusted his verbal assertions regarding the various details of the financial health and operations of the company.
“Part of my role as head of operations was to oversee a recently engaged fractional CFO, who was hired to review financial records and implement policies and procedures appropriate for a company operating at a high standard of financial reporting,” Layman said. “This action was designed to improve internal controls, financial clarity and, in effect, to help ‘scale the businesses to grow into a meaningful tech-media company worthy of a large acquisition price or even an IPO someday. “
He added, “From even before my first day on the job, our team repeatedly requested Beckman to provide login access to bank accounts, to explain and provide support for transactions in the company’s accounts and to provide backup documentation for company expenses.”
Layman said Beckman created an “elaborate set of diffusing excuses, lies and deceptions, which, at the time, we believed.”
Layman added, “In my first month on the job, we reported to the board that we had identified issues and concerns with financial statements previously provided to the board and that these financial statements should not be relied upon. They were inaccurate and, we now believe, had simply been falsified.”
The CFO and I (Jon Layman) have spent the past five months working to “close the books” and prepare restated financial statements, which would then accurately reflect the financial health of the company, the letter said.
“Over the past five months, the board, the CFO and I increasingly pressured Beckman to provide financial records, backup for financial transactions and access to bank accounts. He consistently claimed ignorance regarding simple accounting procedures – and regularly co-mingled personal payments with those due to the corporation,” Layman said.
Layman also said, “As such, he created a complex web of difficult-to-track clouds over the manner in which money flowed from his personal accounts into – and out of – corporate accounts.”
“We do not know the full extent of Beckman’s deception at this time. We will certainly gain more clarity in the coming days. And, while we are unable to share all of the facts at this time, it is important that we are transparent with you at this challenging moment,” the letter said.
The board and management of On are evaluating options for the company, and the letter said it will update shareholders further as this situation develops.
“Like you, we have been shocked, angered, saddened, and in some ways devastated by these events,” the letter said.
Stanojev and Layman said they were appointed interim co-presidents of the company on July 3 following Beckman’s resignation, and they will continue to do their best to lead. They said they will report further when they get more clarity. Stanojev did not respond to a request for comment.
Here’s the full text of the letter below:
Dear Shareholders of ON,
We are writing to deliver unfortunate news regarding the ongoing operations of ON.
Under pressure from the Board, Alex Beckman resigned as CEO and as a board member on Monday, July 1st. This pressure derived from a long series of financial and operating representations made by Beckman regarding the status of the company – many of which turned out to be abjectly false.
On Friday, July 5th, after Beckman’s resignation, we conducted a thorough investigation into the status of the company’s bank accounts – which had been a subject of consternation for months – and discovered that Beckman had used elaborate lies and deception to convince the board and management that ON had approximately $11 million in one of its bank accounts.
This cash was critical to the ongoing operations of the company in which you invested.
To our shock and horror, we discovered that, in reality, the account balance in that bank was only $0.37. This discovery left the company in a liquidity crisis, and the board and management were forced to act quickly, hoping to stave off bankruptcy.
After a series of meetings over the weekend, the board and management determined that the company would need to pause operations and lay off nearly all of its workforce on Monday, July 8.
The company, at that time, held approximately $550,000 in cash, much of which was deployed to pay for these sudden terminations.
California requires same day payout when employees are terminated, so a variety of costs related to those terminations have consumed much of the remaining cash in the company’s bank accounts.
These events were particularly staggering and heart-breaking to both of us, as we have known Alex Beckman for many years. We never imagined a conclusion to his efforts at ON to result in this type of ending.
I, Kalin, co-founded this company with Alex in 2014 with the vision of building a platform to support rich, intelligent messaging between brands and consumers. As our platform and the landscape around us evolved, the opportunity to build an amazing product and technology stack in this space only grew. It was this passion to build something great that motivated myself, my team, and our product vision. My focus has always revolved entirely around the product, engineering and technology of ON.
I was never involved in the finance or business operations, and I realize now that the limited information Alex shared with me was largely false.
Much to my regret, I trusted Alex to run the finances and business properly, knowing well that start-ups are never easy, and that business friction always exists. I wrongly presumed, however, that Alex would behave in a fair, rational, and honest manner as CEO of ON. I expect that as facts related to his management come to light, you will all share my dismay in his actions.
I, Jon, joined ON in February 2024 for the purpose of helping the company mature and prepare itself for a sale and/or a future financing, or, if truly successful, an IPO. When I joined ON, I knew little of the detailed financial results of the company, other than what was represented to me both verbally and in spreadsheets, by Alex. In the short run, I trusted his verbal assertions regarding the various details of the financial health and operations of the company.
Part of my role as Head of Operations was to oversee a recently engaged fractional CFO, who was hired to review financial records and implement policies and procedures appropriate for a company operating at a high standard of financial reporting. This action was designed to improve internal controls, financial clarity and, in effect, to help ‘scale the business’ to grow into a meaningful tech-media company worthy of a large acquisition price or even an IPO someday.
From even before my first day on the job, our team repeatedly requested Beckman to provide login access to bank accounts, to explain and provide support for transactions in the company’s accounts and to provide backup documentation for company expenses.
In response, he created an elaborate set of diffusing excuses, lies and deceptions, which, at the time, we believed.
In my first month on the job, we reported to the board that we had identified issues and concerns with financial statements previously provided to the board and that these financial statements should not be relied upon. They were inaccurate and, we now believe, had simply been falsified.
The CFO and I have spent the past five months working to “close the books” and prepare restated financial statements, which would then accurately reflect the financial health of the company.
Over the past five months, the board, the CFO and I increasingly pressured Beckman to provide financial records, backup for financial transactions and access to bank accounts. He consistently claimed ignorance regarding simple accounting procedures – and regularly co-mingled personal payments with those due to the corporation.
As such, he created a complex web of difficult-to-track clouds over the manner in which money flowed from his personal accounts into – and out of – corporate accounts.
We do not know the full extent of Beckman’s deception at this time. We will certainly gain more clarity in the coming days. And, while we are unable to share all of the facts at this time, it is important that we are transparent with you at this challenging moment.
The Board and management of ON are evaluating options for the company, and we will communicate with you further as this situation develops.
Like you, we have been shocked, angered, saddened, and in some ways devastated by these events.
We were appointed Interim Co-Presidents of ON on July 3rd following Beckman’s resignation, and we are and will continue to do our best to lead the company at this difficult time.
We will report further when we have more clarity on the situation.
Sincerely,
Kalin and Jon
Source link
