ODYSSEY MARINE EXPLORATION OMEX S
October 31, 2013 - 12:00pm EST by
rjm59
2013 2014
Price: 2.84 EPS $0.00 $0.00
Shares Out. (in M): 80 P/E 0.0x 0.0x
Market Cap (in $M): 230 P/FCF 0.0x 0.0x
Net Debt (in $M): 10 EBIT 0 0
TEV ($): 240 TEV/EBIT 0.0x 0.0x
Borrow Cost: NA

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  • Bankruptcy Risk
  • Poor management
* Idea not eligible for membership requirements

Description

Odyssey Marine Exploration was a "leader" in digging up historical tragic national graveyards at shipwreck sites to sell the collectibles to the highest bidder.  Then UNESCO made this business unviable as demonstrated by the "Black Swan" debacle which saw the end result of OMEX paying Spain's legal fees after suing them to return the treasure from the historical Spanish ship.  The company has "pivoted" into new business lines salvaging commodities from commercial ships and undersea mineral exploration....

We have been conducting a detailed investigation over the past several months and believe stockholders have been grossly misinformed about the Company’s history, business affiliations, and prospects.


Executive Summary for OMEX Investigative Report

Target Price: $0.00

Thesis: Strong Sell

Market Cap: $230mm     (80mm x $2.84/sh)

Shareholder’s Equity: ($5.6mm)

Total Cash: $10mm1

Total Debt: $20mm2

Net Loss 2012 – 2008, respectively: ($18.2mm); ($16.2mm); ($23.3mm); ($18.6mm); ($24.8mm)

1)      Unclear how much of this cash resides in the US, OMEX formed offshore subsidiaries in 2013

2)      As of June 30, 2013, over $5.3mm of this debt is convertible with a “death spiral” conversion feature that allows for the payments to be converted to stock at a 15% discount to market

 

“Our talented people, global presence, financial strength and massive market knowledge have created our sustainable and unique businesses.  [Our new business models] will accelerate their growth.  We plan to leverage all of these competitive advantages to create significant value for our shareholders .”

                                -Enron’s 2000 (Final) Letter to shareholders, published 7 months before bankruptcy

 

OMEX was founded by and is currently run by expert stock promoters who have been sued by the SEC.

  • Greg Stemm and John Morris’s previous shipwreck hunting company Seahwak (SWHK: $0.0012) was sued by the SEC.  They refused to cooperate with subpoenas and had a stop order placed on their stock
  • Since 2000, Section 16 insiders have received cash compensation over $20mm and have net sold $5mm of stock, shareholders have been diluted 7-X and accumulated losses of $180mm. 
  • We believe the purpose of OMEX is to serve as a vehicle for OMEX insiders to live a life of glamor hunting the ocean while disappointed investors foot the bill.

We believe OMEX stock is worth Zero and if OMEX is unable to raise equity they will be forced to file bankruptcy within the next 6-12 months.

  • In spite of the recent Gairsoppa success, OMEX’s business lines of historical shipwrecks and commodity shipwrecks have averaged $20mm of annual losses over the past 5 years and we believe are unlikely to repay OMEX’s growing debt burden.
  • The CEO has publicly stated they do not have enough cash to operate through the end of 2014 and carries their debt at a discount to face value on their SEC financials.
  • As highlighted by the “Black Swan” debacle, we believe UNESCO’s new regulations to protect national gravesites and heritage make for-profit historic shipwreck hunting unviable.

We believe OMEX’s new business of undersea mineral exploration is a pipedream and worth zero

  • We believe that management representations of “$179mm of Off Balance Sheet Value” in equity stakes are inflated by at least a factor of 10 and we question whether they are based on non-arm’s length transactions.
  • In early 2013, OMEX created a new business “Oceanica” that utilizes opaque offshore subsidiaries in Panama and Bahamas that we question how there could be any valid business purpose and are reminiscent of Enron’s use of off balance sheet entities to obfuscate the true nature of cash transfers and inflate valuations.
  • We believe that Neptune Minerals, Inc. – founded by John Morris, co-founder and former CEO of OMEX – is also worthless and is simply a reincarnation of Neptune Minerals, Plc, a failed public company in the UK which John Morris acquired for $140,000 in 2011.
  • According to an attachment to OMEX’s recent 10Q, via Oceanica, OMEX is partners with a Panamanian company, DNA Ltd Inc.  Our investigation finds substantial evidence that DNA’s principal members are connected to r at least 3 alleged pump and dump frauds and admitted involvement in the $400mm money laundering scandal, “Teegan Inc.”

 

Our complete report is 70-pages, detailed and contains complex content. We debunk the bull case for OMEX in Chapter 3 and recommended investors familiar with Odyssey begin there, specifically in sections 3 and 4, where we show that the value of Neptune and Oceanica are zero or nearly zero. We also show Panamanian registration documents which reveal that OMEX’s Oceanica subsidiary is tied directly to known financial fraudsters via its partnership with DNA ltd.

Our full report that is too long to post to VIC and includes diagrams to help walk through the convoluted structures the company uses can be downloaded at www.omextruth.com


 
I do not hold a position of employment, directorship, or consultancy with the issuer.
I and/or others I advise hold a material investment in the issuer's securities.

Catalyst

They are running out of cash, the CEO has said they have enough cash to operate through "most of 2014".
Management has been raising money under the auspices that their undersea mining business is extremely valuable and has stated they have "Off balance sheet value" of $179mm.  With their undersea mining business exposed as likely worth zero, it seems likely they will be able to raise equity to finance their $20mm of losses per year.
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    Description

    Odyssey Marine Exploration was a "leader" in digging up historical tragic national graveyards at shipwreck sites to sell the collectibles to the highest bidder.  Then UNESCO made this business unviable as demonstrated by the "Black Swan" debacle which saw the end result of OMEX paying Spain's legal fees after suing them to return the treasure from the historical Spanish ship.  The company has "pivoted" into new business lines salvaging commodities from commercial ships and undersea mineral exploration....

    We have been conducting a detailed investigation over the past several months and believe stockholders have been grossly misinformed about the Company’s history, business affiliations, and prospects.


    Executive Summary for OMEX Investigative Report

    Target Price: $0.00

    Thesis: Strong Sell

    Market Cap: $230mm     (80mm x $2.84/sh)

    Shareholder’s Equity: ($5.6mm)

    Total Cash: $10mm1

    Total Debt: $20mm2

    Net Loss 2012 – 2008, respectively: ($18.2mm); ($16.2mm); ($23.3mm); ($18.6mm); ($24.8mm)

    1)      Unclear how much of this cash resides in the US, OMEX formed offshore subsidiaries in 2013

    2)      As of June 30, 2013, over $5.3mm of this debt is convertible with a “death spiral” conversion feature that allows for the payments to be converted to stock at a 15% discount to market

     

    “Our talented people, global presence, financial strength and massive market knowledge have created our sustainable and unique businesses.  [Our new business models] will accelerate their growth.  We plan to leverage all of these competitive advantages to create significant value for our shareholders .”

                                    -Enron’s 2000 (Final) Letter to shareholders, published 7 months before bankruptcy

     

    OMEX was founded by and is currently run by expert stock promoters who have been sued by the SEC.

    • Greg Stemm and John Morris’s previous shipwreck hunting company Seahwak (SWHK: $0.0012) was sued by the SEC.  They refused to cooperate with subpoenas and had a stop order placed on their stock
    • Since 2000, Section 16 insiders have received cash compensation over $20mm and have net sold $5mm of stock, shareholders have been diluted 7-X and accumulated losses of $180mm. 
    • We believe the purpose of OMEX is to serve as a vehicle for OMEX insiders to live a life of glamor hunting the ocean while disappointed investors foot the bill.

    We believe OMEX stock is worth Zero and if OMEX is unable to raise equity they will be forced to file bankruptcy within the next 6-12 months.

    • In spite of the recent Gairsoppa success, OMEX’s business lines of historical shipwrecks and commodity shipwrecks have averaged $20mm of annual losses over the past 5 years and we believe are unlikely to repay OMEX’s growing debt burden.
    • The CEO has publicly stated they do not have enough cash to operate through the end of 2014 and carries their debt at a discount to face value on their SEC financials.
    • As highlighted by the “Black Swan” debacle, we believe UNESCO’s new regulations to protect national gravesites and heritage make for-profit historic shipwreck hunting unviable.

    We believe OMEX’s new business of undersea mineral exploration is a pipedream and worth zero

    • We believe that management representations of “$179mm of Off Balance Sheet Value” in equity stakes are inflated by at least a factor of 10 and we question whether they are based on non-arm’s length transactions.
    • In early 2013, OMEX created a new business “Oceanica” that utilizes opaque offshore subsidiaries in Panama and Bahamas that we question how there could be any valid business purpose and are reminiscent of Enron’s use of off balance sheet entities to obfuscate the true nature of cash transfers and inflate valuations.
    • We believe that Neptune Minerals, Inc. – founded by John Morris, co-founder and former CEO of OMEX – is also worthless and is simply a reincarnation of Neptune Minerals, Plc, a failed public company in the UK which John Morris acquired for $140,000 in 2011.
    • According to an attachment to OMEX’s recent 10Q, via Oceanica, OMEX is partners with a Panamanian company, DNA Ltd Inc.  Our investigation finds substantial evidence that DNA’s principal members are connected to r at least 3 alleged pump and dump frauds and admitted involvement in the $400mm money laundering scandal, “Teegan Inc.”

     

    Our complete report is 70-pages, detailed and contains complex content. We debunk the bull case for OMEX in Chapter 3 and recommended investors familiar with Odyssey begin there, specifically in sections 3 and 4, where we show that the value of Neptune and Oceanica are zero or nearly zero. We also show Panamanian registration documents which reveal that OMEX’s Oceanica subsidiary is tied directly to known financial fraudsters via its partnership with DNA ltd.

    Our full report that is too long to post to VIC and includes diagrams to help walk through the convoluted structures the company uses can be downloaded at www.omextruth.com


     
    I do not hold a position of employment, directorship, or consultancy with the issuer.
    I and/or others I advise hold a material investment in the issuer's securities.

    Catalyst

    They are running out of cash, the CEO has said they have enough cash to operate through "most of 2014".
    Management has been raising money under the auspices that their undersea mining business is extremely valuable and has stated they have "Off balance sheet value" of $179mm.  With their undersea mining business exposed as likely worth zero, it seems likely they will be able to raise equity to finance their $20mm of losses per year.
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