Investor Alert: Odyssey Marine Exploration (OMEX)
by Sonya Colberg, Senior Editor, 10/24/2016 10:54:03 AM
TheStreetSweeper issues an investor alert for Odyssey Marine Exploration (OMEX).
The shipwreck exploration company is rapidly turning into an epic shipwreck that will leave unwary investors drowning in its wake.
The company faces massive issues, including:
*Virtually no cash left.
*At the brink of Nasdaq delisting.
*Likely bankruptcy or major dilution looming.
*Professional promoters, chatrooms hype the stock.
*Don Diego project application is dead.
*Recent announcement apparently meaningless; actually a lost opportunity.
*OMEX loses millions while executives make millions.
Financial distress has forced this Tampa, Florida company to essentially give up salvaging shipwrecks in December 2015 to re-focus on mining underwater phosphates in Mexican waters. But that plan was derailed six months ago when the Mexican government rejected the company's environmental application to dredge in the "Don Diego" deposit.
Let's look more closely at OMEX, most likely the worst company we've ever considered...
*1. Virtually No Cash Left
Today's investors might be surprised to learn that OMEX has operated as a hobby for the past decade, as shown by consistent yearly net losses.
Those losses reflect OMEX' ongoing predicament of cash burn exceeding available cash:
(Source: Company SEC filing)
The company managed to add to cash and cut debt by selling its exploration boat, headquarters building and shipwreck inventory in December 2015. Company filings say now there's no remaining inventory.
And by the end of September 2016, barely assisted by a $2.4 million contract, OMEX was likely almost down to its last dollar. But Epsilon Financing agreed to amend a note to give OMEX its final $3 million infusion - at a draconian 10% interest rate. The loan allows OMEX to limp along another quarter until the wolves line up at the doorstep again ...
*2. Finance Or Delist
So OMEX is left with two choices: It must get significant financing, likely via convertible shares ... or go to the dreaded over-the-counter bulletin board.
When the stock goes to the bulletin board, the show's over. Everyone moves on. And the stock we believe is left to trade for about 50 cents apiece.
*3. Nasdaq Delisting
The delisting notification boils down to this...
To hit that valuation, shares need to trade for about $4.65 per share and remain at that level for 10 consecutive business days by Nov. 21.
Ekso Bionics Holdings (EKSO): Good Times Come To A Screeching Halt
by Sonya Colberg, Senior Editor, 10/19/2016 10:59:47 AM
Ekso Bionics Holdings (EKSO) has been involved with the colorful Adam S. Gottbetter, known for nimble PIPE financing, a quick song with British group Squeeze ... or ...
(Source: YouTube video of Adam Gottbetter singing "Take Me, I'm Yours" with Squeeze)
... even a money raise for shock jock Howard Stern's favorite strip club.
Mr. Gottbetter became a key figure behind Ekso's private placement offering in January and February 2014 - Mr. Gottbetter's entity and sub-agents received ~3 million warrants exercisable at $1 per share, plus $3.03 million in commissions for handling the private placement.
But the good times came to a screeching halt.
Seven months after Ekso's PIPE, Mr. Gottbetter was sentenced to 1 1/2 years for stock fraud.
His guilty plea was in connection with schemes to manipulate three other companies' stock "with a view to selling his own shares at a profit." He's reportedly been involved with more than 160 companies but the companies named in the SEC criminal complaint were Kentucky USA Energy (KYUS, bankruptcy), Dynastar Holdings (DYNA, now $0.05, little or no trading) and HBP Energy Corp. (HBPE, now $0.00).
The Securities and Exchange Commission had this to say about Ekso's former investment banker:
"The SEC alleges that Adam S. Gottbetter orchestrated promotional campaigns that touted the prospects of microcap companies and enticed investors to buy their stock at inflated prices so he and his cohorts could sell shares they controlled and reap massive profits."
"During one meeting in New York City, Gottbetter complained about the difficulties of stock manipulation but conceded that robbing a bank was the only other way to make so much money so quickly."
When the trade publication QMed wrote about Mr. Gottbetter’s jail time for stock manipulation, the publication posted this comment from Ekso:
But Ekso apparently did not break ties with Mr. Gottbetter's law firm after his plea.
In the company's April 2016 filing regarding Ekso's private offering, we see that Mr. Gottbetter's entity, Gottbetter & Partners, examined the validity of the stock offering.
(Source: Company SEC filing)
The SEC broke ties with the attorney last year due to the SEC complaint and Mr. Gottbetter's guilty plea. In a remedial action dated June 23, 2015, the SEC suspended Mr. Gottbetter from practicing before the commission as an attorney:
(Source: SEC litigation)
Investors may find other viewpoints here. Meanwhile, TheStreetSweeper presents an executive summary on the Ekso investment risks:
*The company went public via a reverse merger with a Chile-based shell, followed later by a reverse stock-split.
*Despite pleading guilty to criminal stock manipulation charges, Ekso's investment banker remained tied to the company through his law firm, an Ekso filing indicates.
*Potential dilution looms. In an August stock sale, Ekso greatly reduced the price of warrants and preferred shares, which may pose potential dilution following the Nov. 7 lockup release. Also, another 195,313 share unlock occurs on Dec. 1, 2016.
*Ekso partners are signing up with rivals.
*Ekso enjoys very little institutional interest and some institutions have sold their Ekso stock.
*Professional stock promoters are trying to increase the stock price.
*Executive compensation exceeds $3 million.
*Sales are low and plunging to just $1.6 million last quarter, while operating losses hit $9.4 million.
*The cash burn rate is ~$7 million or 4 1/2 times sales last quarter.
*Persistent negative cash flow.
Now we'll step back four years, when the investment risks were beginning to form.
*1. Background: Building Risk
Ekso took a rather unconventional route to getting listed on the Nasdaq.
It began with PN Med Group, a company operating out of its president's home in Santiago, Chile. PN Med initially sold shares for $0.02 in its May 2012 public offering. The two-person company planned to use the president's car to distribute medical supplies made in China to clinics in Chile. But by the end of fiscal year 2013, it had managed nothing more than $16,949 in losses and no revenue.
This sort of shell company is just what companies look for when they're planning the cheap, fast alternative to going public.
So Ekso spotted PN Med. On Jan. 15, 2014, the companies conducted a reverse merger into Ekso Bionics, with plans to develop and sell "bionic human exoskeletons." Concurrently, the company completed a complicated deal involving bridge notes and the Gottbetter-managed private placement resulting in a $1 per unit alternative public offering.
But the new Ekso stock didn't catch on and by early 2016 fetched only about $0.85 per share. So the company pulled a 1-for-7 reverse stock split on May 4, 2016, pushing the post-split price to $5.44 per share on June 1.
Then the stock price got predictably hammered in the Aug. 9, 2016 follow-on public offering of 3.75 million shares at $4 per share. Though Ekso tried to soften the blow by leading the press release with news that the stock had been uplisted, the stock that traded for ~$6.22 plunged 37% to $3.94 in one day.
(Source: Yahoo Finance)
Now this Richmond, California exoskeleton maker just continues to heap risk on top of risk...
*2. Adjusted Prices Favor Insiders, Dilution Looms For Average Shareholders
That August raise generated about $14 million but came stacked with preferential treatment for some shareholders.
The company greatly lowered the price at which both warrants and preferred shares can be converted to common stock.
"Holders of our Series A preferred stock will be entitled to an anti-dilution adjustment as a result of this offering, which will result in dilution to the holders of our common stock, including the shares issued in this offering “ and “— The exercise price of certain of our outstanding warrants may adjust as a result of this offering, and the exercise of such warrants would result in dilution to our stockholders.”
So the conversion price of the preferred stock has been adjusted down from $7.07 to $3.74 per share."
And the warrants that would have carried an $8.75 exercise price were adjusted down to the bargain basement price of just $3.74 per share.
The filing includes this ominous note:
So these cheap shares owned by insiders will be released from the 90-day lock-up about Nov. 7, posing significant dilution potential for average shareholders.
*3. Partners Switch To Rival Technologies
JAMN Finally Spills the Beans -- And It's an Ugly Mess
by Janice Shell, 6/2/2011 10:32:51 AM
To be sure, the 10-K offered investors little reason to sing. For starters, the filing reveals, this once-hot “coffee company” sells no coffee of its own at all. JAMN relies on a supplier based in frigid Canada – far away from the tropical Jamaican home of its co-founder Rohan Marley – to provide the company with an actual product to sell to its customers instead.
Back in April of 2010, JAMN inked a “supply and toll agreement” with Canterbury Coffee of British Columbia that gave it access to some brew. According to that agreement, JAMN relies on Canterbury to fulfill every role – save a minor one – normally satisfied by a firm that classifies itself as a coffee company. Canterbury purchases the coffee beans. It roasts them. And it then packages them in bags supplied by JAMN – the company’s only real product – for sale to the public.
JAMN signed this deal more than a year ago, right before Shane Whittle – a notorious Vancouver stock promoter – officially resigned as CEO of the company. But the company never mentioned that agreement, seemingly material enough to warrant at least a quiet 8-K report, in a single regulatory filing until now.
Jammin Java (JAMN): Hot Stock ... Bitter Aftertaste?
by Janice Shell, 6/2/2011 10:30:25 AM
It’s time to wake up and smell the coffee! That’s exactly what Jammin Java (OTC: JAMN.OB), a heavily promotedcoffee company, and – for very different reasons – TheStreetSweeper would like investors to do.
Since the beginning of the year, JAMN has miraculously risen from the ashes of the “Grey Market” graveyard to become one of the liveliest – and richest – stocks in the entire microcap arena. JAMN has seen its stock shoot straight toward heaven, soaring from 55 cents to peak above $6 a share on massive daily volume, with its market value nowtopping $355 million despite the company’s limited resources and operating history. (As covered in more detail below, two of the Internet tout sheets pushing JAMN the hardest effectively vanished -- disabled by their Internet servers -- on the day the stock’s trading volume exploded past 20 million shares.)
CCME: Few Signs of Life at 'Healthy' Chinese Firm
by Roddy Boyd, 3/23/2011 9:30:34 AM
Also, and this cannot be understated, hanging out on a sidewalk in Fujian–the sidewalks double as parking spots when the streets, which appeared to have been designed in the Han Dynasty, fill up–was not a viable option. There was also the matter of the world-class headache the Financial Investigator was developing from Fuzhou’s diabolical smell, an epic conflation of poor sewage treatment, air pollution and the smell of cabbage that made getting the hell off Dongjie street a matter of vital importance.
The Financial Investigator and his traveling companion for the trip, an American investor with extensive experience in China, decided to head upstairs despite our interview with the CFO having been cancelled at the last minute (with no explanation given.) We thought a quick tour of the offices and meeting a few other executives might open our eyes to a few things.
Though the language barrier was a little steep with the young receptionist–when we asked for writing paper, she provided Kleenex–we were in short order shown to their conference room and told to wait. It did not escape notice that pride of place in the conference room belonged to a framed certificate of participation from the Fall 2010 Rodman & Renshaw conference, the World Cup for reverse merger companies and the pumpers and touts who peddle them.
Eventually chief operating officer James Yu came down and after spending 30 minutes trying to understand who we were, concluded that giving us a tour wouldn’t hurt. Soon enough, his colleague, Vinne Ye–the chairman’s assistant–came out and took us around.
It was most eye-opening.more...
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