Hey Grumps,
Could be good news for OMOG. I personally have sold all of my positions now. I am not comfortable getting back in at these levels. Honestly, the past 2 pr's have made me a little skeptical about the operations going on with OMOG. I will tell you why in detail and then I will not post about this again unless asked, because I do not want to appear that I am bashing in any way. Just stating my feeling on this.
First PR, Omog states plans to begin repurchase of 100mil shares on May 12 with 10mil share buyback on that date. Any time a company expresses their intent to buy a specific amount of shares beginning on a specific day in the future, I become skeptical. Any smart company would repurchase the shares at a time which was convenient for the company (funding available, pps down...) To announce your repurchase plans to the world in this way is absurd. That has the potential to raise the pps of the stock and cause the company to pay a higher price for the stock. They should also know to wait until the stock has settled back down to its rightful pps, instead of the inflated pps we now see due to the excitement of the run. For example, OMOG could pay right now an average of about .008/share for the 100mil shares if they time the buys right. That is $800,000. If they did not release these pr's to keep the share price up there, OMOG would most likely have settled to about .005/share and they would have only had to pay about $500,000 (a difference of $300,000)
The second PR, OMOG states cancellation of $400k debt from prior 100mil share repurchase. This debt is owed to Adam Barnett, OMOG's Chairman of the Board. He stated to me in an email that the repurchased shares had not been paid for, yet they were not showing it as a debt on the books. The total repurchase at that time was 200mil shares (all from Mr. Barnett). Two things seem wierd to me on this.
1. At the time of the repurchase OMOG value was around .002, yet the debt owed for that 100mil shares was $400k meaning OMOG offered .004 for each share (twice the value it currently was) and in the PR announced that the terms were "very favorable to the company" I have a hard time seeing how these terms can be favorable to the company.
2. Who in their right mind would write off $400k that a company owed them. Chairman of the Board or not, that is a huge amount of money.
Finally, I emailed Mr. Barnett with my concerns. Normally he responds very cordially and with good explanations. This was what he wrote back to me.
"We have been doing well. We don't mind paying a lil more for the shares.
I'm swamped, thanks for the e-mail
AB"
Paying a lil more for shares and paying a needless $300k or so are two very different things. And the fact that Barnett did not want to clarify any of my concerns as opposed to previous emails has me feeling that my concerns are well grounded.
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That is all I will say on the OMOG subject unless a question is asked of me or there is something new that comes up to make me feel differently. I wish you all good luck, and would like to once again insist that no one base their decision solely off of what I have said here.
Good luck to you Grumps,
-mex
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