The author of this article is SHORT OMNT
Since we warned investors about Ominto Inc (OMNT $OMNT) last June, its stock has declined almost 50%. Despite this precipitous decline, we believe the stock will eventually fall even further because we expect the company to attempt to raise capital and to eventually be delisted as a result of the questionable accounting the company utilized to obtain its Nasdaq uplisting.
Besides this questionable accounting, there are many other reasons to be concerned about OMNT including that it loses money and has not filed any financials since its March 2017 10Q. OMNT failed to file its June 2017 10Q which was due in August and also recently changed auditors (yet again). Also, there are serious questions regarding the activities of one of OMNT’s largest shareholders. Finally, we believe the company needs cash and its stock is dramatically overvalued.
The Nasdaq will soon have an opportunity to correct what we consider to be its faulty decision to uplist OMNT (which, among other things, triggered a generous bonus for OMNT’s CEO). Since OMNT failed to file its June 10Q on time, OMNT is no longer in compliance with Nasdaq's continued listing requirements. OMNT has a right to submit a plan to the Nasdaq by October 23, 2017 describing how OMNT intends to regain compliance. The Nasdaq has a right to reject the plan which would obviously be detrimental to OMNT’s stock price.
The Nasdaq seeks “to maintain the quality of and public confidence in its market, to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and to protect investors and the public interest.” Considering OMNT’s highly questionable accounting, its failure to file financials and numerous other red flags we have highlighted, we feel allowing OMNT to remain listed would be a blatant disregard of the exchange’s stated objective and would lead people to wonder if the exchange is more interested in getting listing fees than it is in protecting the investment community.