The former CEO of voicemail firm SpinVox has resigned after four months as CEO of a social media startup, which has bought out another web firm despite being in worsening financial difficulty.
According to Phreadz’s SEC filings: “On November 9, 2010, Christina Domecq submitted her resignation as Director and CEO. The resignation was accepted. Ms. Domecq’s resignation was not based upon any disagreement with us on any matter relating to our operations, policies or practices.”
Phreadz is a mysterious online startup resulting from a complex, ongoing series of acquisitions and business reconfigurations. Phreadz Inc was formerly listed as a mining rights prospector and a shell company, Atwood Mining and Minerals Corp.
But in April this year, with eyes seemingly on digital media, it completed a reverse merger with Phreadz USA LLC (already an attempted social multimedia startup created by former Podcast.com CTO Jonathan Kossmann) and Universal Database of Music USA LLC (a music-recommendations project developed by audio technologist Jacque Krischer).
The new-look Phreadz intends to let users “move content between and among all major social networking sites and media and to create information and entertainment channels”, making money from advertising and user subscriptions.
But Phreadz is starting largely from scratch on this, against established operators, and the to’ing, fro’ing and recapitalisation efforts are messy, posing considerable threat to those aims.
— Between its April 2009 formation and filing earnings ending August 31, 2010, it lost $13.8 million, and generated no revenue. It still bills itself as “a development stage company”.
— Phreadz had a capital deficit of $452,625, conceded it did not have enough money to see it past 2010 and said it needed new investment, but warned “any equity financing may be very dilutive to our existing shareholders”. Much of the equity was sold before Domecq’s arrival.
— A week before Domecq’s resignation and the agreement to buy ZoneIn2, Phreadz sold a million common-stock shares to six investors for $162,000.
— Phreadz was already loaned-up by company members to the tune of about $1 million. It wrote off the value of Krischer’s music database intellectual property for $5 million, despite keeping Belgian Krischer on as music president and, later, chief strategy officer, on a $15,000-a-month salary and a bonus of at least $150,000.
ZoneIn2 offers online document edit collaboration and web-based messaging, so could augment what technology Phreadz already has.
Domecq had joined as Phreadz CEO in June, on a $250,000 salary, a potential 100 percent bonus, plus stock and options worth $1.5 million.
Original Phreadz founder Kossman resigned as president in August, citing “reduced faith and confidence in the company board of directors“.
Domecq in February left SpinVox, a UK voicemail-to-text firm that was historically well-regarded and which had raised about $200 million in investment, after customer scepticism about its transcription algorithms, after worsening financial problems and after a board-level investigation concluded her use of company expenses had effectively created a “current account” between her and it.
Domecq paid back £125,000 and SpinVox was acquired for $102.5 million in December by Nuance, which is now using the technology in its business communications products.