Yesterday we covered a Federal Trade Commission settlement with Epic Media Group over allegations of “history sniffing,” and pointed out that the company had many things in common with a new ad company called Kinetic Social. Those similarities include employees, executives, and website copy.
Today Kinetic reached out to AdExchanger to address its supposed connection to Epic. In short, the company says it is a divestiture of Epic Media Group but should not be conflated with the company in any other respect.
Here is the statement in full:
“Based on a recent FTC press release and some follow on blogs covering it, we at Kinetic feel the need to clarify the facts of this matter for the record.
#1: Don Mathis was the acting CEO of Epic Media Group during the period in question regarding the alleged history sniffing, which was well over a year ago. His involvement, as well as those of any current Kinetic Social staffers in this FTC case settled with Epic was nominal and at no time were any current Kinetic staffers wittingly or proactively involved with history sniffing.
#2: Don Mathis is NOT the CEO of EMG now (nor was he when he was employed by that company, see point above), despite the FTC draft statement release.
#3: EMG is, clearly, in the process of settling with the FTC based on a set of actions which were covered in the news and dealt with at that company OVER A YEAR AGO. But Kinetic is not EMG, and this is their business, not ours’.
#4: Worth repeating again, Kinetic Social is NOT EMG. It is not the successor entity of EMG, it is not financially related to EMG, and it is a separate business in every definition of that phrase, and certainly under the law.
- Kinetic Social is a divestiture from EMG. It is a legal, vetted, bona fide spin-out in every meaning of the term. It is a separate company. The only assets spun out were those that pertained to the social media business, since Kinetic operated as EMG’s social subsidiary from its date of formation in 2010 through its divestiture in October of 2011. Those assets were paid for via a commercial debt facility … no funds otherwise owed to any Epic supplier, vendor, customer, business partner or otherwise were used to create Kinetic.
- Kinetic has a distinct business model, client list, technology, lending provider, offices, capital structure and, in many cases, personnel. There were 310 employees of EMG; 19 came to Kinetic when it was created.
- EMG was a solvent business (from both balance sheet and a cash flow tests) when Kinetic was spun out, and EMG continued to operate after Kinetic was spun out.
- Don Mathis was the CEO of Epic Advertising, a different company that was merged into Connexus Corp. in 2010 to create EMG.
#5: The history sniffing controversy – which was well documented in the public sphere last year — was a function of a technology that was used by Connexus, prior to and subsequent to the creation of EMG. This practice was not disclosed to Epic Advertising at the time Epic Advertising was merged with Connexus in 2010. Once the practice was discovered, the company took proactive steps to stop it.”
