Trans-Pacific Aerospace Company Inc (OTCMKTS:TPAC) Loses its Bearings
Dilution is one of the most common problems among penny stock companies and Trans-Pacific Aerospace Company Inc (OTCMKTS:TPAC) has definitely suffered from it. In fact, TPAC might be one of the worst offenders.
Several amendments to the articles of incorporation were made in a matter of a few short months and the number of authorized shares was lifted from 150 million all the way to 4.5 billion. At the same time, the printing press was working overtime.
The O/S count grew from under 200 million in March 2014 to nearly 500 million in March 2015 which represents 314% in dilution in a matter of twelve months. That’s pretty bad, but it’s nothing compared to what happened over the following months. According to the company profile at the OTC Markets, there were more than 1.3 billion shares issued and outstanding on April 23 and about 545 million of them represented the float. Yesterday, however, investors traded more than 620 million shares in a matter of just six and a half hours which could suggest that some more stock has seen the light of day since then.
We wrote about TPAC in March and if you check out our article, you’ll notice that one of the main reasons for the truly catastrophic dilution is called convertible debt. Don’t know what convertible debt is?
Apparently, you’re not the only one. Bill McKay, TPAC‘s CEO, wrote a post on the company’s website in an attempt to explain how it all works. We reckon that he did a decent job, but he did fail to mention one thing – how all the toxic notes affect the stock performance.
The people who have been invested in TPAC for long enough don’t need such an explanation. They already saw the value of their stock drop from a 52-week high of just under $0.04 per share about a year ago to the 52-week low of $0.0001 logged on May 18.
Bill McKay apparently realized that the convertible debt is putting quite a lot of pressure on the ticker and he decided to act. Yesterday, he announced the results of his efforts. He said that one of the convertible notes held by KBM Worldwide was repaid on May 28 and he also said that “the flood of conversions will cease”.Later, he tweeted a few pictures of bearings that are supposedly manufactured by TPAC and assured the shareholders that some more solid press releases will come out in the near future.
Even that, however, wasn’t enough to push the ticker in the right direction. TPAC did experience a volume spike and it did register an intraday high of $0.0006 for the first time in over two months, but it eventually settled down to a close of $0.0004 – exactly the same as the price at the end of last week.
So, investors don’t appear to be entirely convinced and you might be wondering why.
The dismal financial report for the quarter ended January 31 does raise the question of how TPAC managed to find the money to pay off the convertible debt and even manufacture bearings. The bigger problem, however, probably lies with the fact that trusting Mr. McKay might be a bit difficult for some people.
Take this press release he issued at the end of March 2014 as an example. In it, he said that the company has registered the first sales of its spherical bearings. A few months later, he issued a second PR which, allegedly, validated the claims made in the first one and announced another purchase order from an NYSE-listed company with a $5.5 billion market cap.
Good news, you have to agree and we’re pretty sure that some people bought in because of it. Sadly, they were left bitterly disappointed when they found out that the announced purchase orders are missing from TPAC‘s SEC filings. According to the reports, the company hasn’t registered any revenues since inception. Make sure you bear this in mind while you’re waiting for Mr. McKay’s next “solid press release”.
