Odyssey Marine: Do Investors Know What Lies Beneath the Surface? Part 2

| About: Odyssey Marine (OMEX)

Executive Summary for OMEX Investigative Report

Target Price: $0.00

Thesis: Strong Sell

Market Cap: $180mm (84mm x $2.15/sh)

Shareholder's Equity: ($4.5mm)

Total Cash: $11mm*

Total Debt: $23mm

Net Loss 2013 - 2009, respectively: ($21.5mm) (9mos); ($18.2mm); ($16.2mm); ($23.3mm); ($18.6mm)

*We believe that $6mm of this may be offshore based on $2.9mm "non-controlling interest" in 10-Q.

Click to enlarge

This report is a follow up to our first 66-page report published October 31, 2013 which can be found at www.omextruth.com.

"Odyssey's cynically deploying a few random nodes of truth to the end of evading the acknowledgement of an over-arching and regnant truth." -Judge Steven D. Merryday in the Sept 25, 2013 'Black Swan' ruling against Odyssey1

In response to our initial report, OMEX held a conference call November 5th, not open to general Q&A, where they refuted exactly ZERO of our factual statements

Here, we will expose the public relations techniques used by Greg Stemm to try to discredit our research by taking our factual statements out of context.

OMEX failed to address our serious questions and management explanations do not hold up. For example, we include 3 sources indicating that Panamanian locals are not required to "satisfy regulatory framework" as OMEX has claimed.

OMEX's most recent 10-Q filed November 12th has numerous revisions that we highlight including that Neptune Minerals, Inc. -- claimed as a source of $108mm of "off balance sheet value" -- now appears to be insolvent.

  • Neptune appears to have lost $25mm over the last fiscal year ended June 30, far greater than "a few million" that OMEX anticipated in their August 10-Q.
  • As of June 30, 2013, Neptune's total accumulated deficit appears to be $49mm. This exceeds Neptune's total equity raises, indicating insolvency: we believe NMI is worth zero.
  • Despite Neptune still being unable to pay its bills to OMEX, OMEX lent an additional $500,000 to Neptune during the 3 month period ending Sept 30, 2013.
  • Further research into the Oceanica mining project also indicates to us this project is worthless: other claimed "world class" assets have a high failure rate, do not be deceived by this empty term.

OMEX has delayed its Commodity Shipwreck business to 2H 2014 and we believe this business is extremely risky

A new 5 word disclosure was added to this 10-Q related to the Mantola recovery effort: "but no silver was found"

Despite OMEX's record find it the Gairsoppa, even if OMEX books a $20mm profit in Q4 2013, the average net loss per year for 2012-2013 will still exceed $10mm per year.

We believe the "four separate 20th-century shipwrecks" that OMEX touts are likely Nazi cargo ships and if so, we question how they could possibly have a valid cargo "rights secured under contract."

We believe these four ships were found in 1997 by a British Company and are in extremely deep waters that present new technical hurdles.

If you own the stock, you deserve answers more than anyone, so demand them from your company. As shareholders, management reports to YOU.

Key Questions for OMEX that Shareholders Deserve Answers to:

1. Please explain why one of OMEX's Bahamian subsidiaries appears to have been created in 1983 with Greg Stemm's name listed? Why are any Bahamian subsidiaries necessary for OMEX?

2. If the directors listed on DNA are not involved in that entities daily operations, why are Panamanian directors listed on DNA paperwork and not the true directors?

3. Is it true that Carlos Arida Miguel, apparent cofounder of Oceanica, is an 89 year old Mexican with no mining background? When you took over Oceanica what did you pay this man?

4. Why did you disclose on the previous 10-Q filed August 8, 2013 that you believed Neptune would have a loss of a "few million dollars" for the fiscal year ended June 30, 2013. It appears from your recent 10-Q that you lent them $500k around this date and we believe you would have known they had losses of $25 million.

5. Does Neptune have any ongoing operations? Based on your recent 10-Q, it appears to have an accumulated deficit of $49mm while we believe it has raised less equity than this. How is Neptune funding any operations if they are ongoing?

6. Are the "four commodity shipwrecks" you refer to in your pipeline the so-called "German blockade runners"? Namely: Rio Grande, Burgenland, Karin, and Rhakotis.

7. If so, how did you acquire their positional information? We believe these were discovered in 1997 by Bluewater Recoveries Ltd. at great expense2.

8. If so, how do you have a salvage contract for the cargo? The cargo of these 4 ships belonged to the Nazi German government which no longer exists.


[1] CASE NO. 8:07-cv-614-T-23MAP - Docket 364, p12, sentence starts with "Odyssey's characterizing her as a "vessel . . . assigned to transport mail, private passengers, and consignments of merchant goods and other cargoes" is a splendid and representative example of...Odyssey's…"

[2] http://www.bluewater.uk.com/gallery.htm

Disclosure: I am short OMEX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.