More Serious Questions Regarding Ominto’s Accounting

Updated on

The author has a short position in Ominto Inc..

We have written several articles cautioning investors about Ominto Inc. aka  $OMNT. Yesterday the company released what we consider to be devastating news which confirms our suspicions about omnt’s accounting practices (which we noted here) as well as omnt’s auditing firm (which we noted here).

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Yesterday, after failing to file it's 10Q on time, omnt filed a NT-10Q which stated:

"The Company is presently evaluating certain accounting positions that could have a material impact on the Company's financial statements for one or more prior reporting periods.  Because management is devoting considerable time and resources towards quantifying the impact, if any, of such accounting positions, the Company’s 10-Q for the fiscal quarter ended June 30, 2017 could not be completed without incurring undue hardship and expense. The Company does not anticipate filing such Report within the prescribed five-day time period but will continue its efforts to do so as soon as practicable."

We believe the accounting positions the Company is evaluating relates to its investments in Lani and Quant. We had questioned the valuations assigned to these investments and believe they were artificially high in order to enable the company to qualify for a NASDAQ listing, which then triggered a large bonus to the CEO.

We believe the company will now have to write down the value of these investments, which could have multiple negative consequences for the stock price . The consequences could include a massive hit to management's credibility, a NASDAQ delisting, a possible investigation, and shareholder lawsuits.

It is also troubling that omnt will not be able to file it's 10Q within the prescribed five day period. This leads us to believe that the troubles at omnt are far more severe than investors may be anticipating.

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