Trans-Pacific Aerospace Company Inc. (fka TPAC)

[donaldwalkinshaw]

New news just released on their website...check it out!
http://www.tpacbearings.com/news

INCREASE IN AUTHORIZED SHARES
Many shareholders have noticed that we just increased the number of authorized shares from 1.5 to 4.5 billion. There are a few reasons for this. Firstly, as most of you are aware, TPAC has convertible debt that has been converting. The note holders require that we maintain in reserve a significant number of shares, approximately three times the number of shares anticipated to be converted. We have been doing this, but have fallen short of the number. We increased the authorized a few times, but it wasn't enough. Rather than chip away at it, we decided to make a more significant increase in the number of authorized shares, thus this increase.
Additionally, we wanted this increase in order to issue shares to insiders. These shares were issued in exchange for cash and debt forgiveness. While this does increase the number of shares outstanding, it does not increase the float, as the shares are in the hands of insiders. Secondly, with the issuance of these shares, we can continue to maintain control of the company so that we can make certain that we continue down the path we have set for ourselves.
Several people have asked me directly if we are planning a reverse split. The answer is a firm No. We have been approached by many people who have encouraged us to do so and we have soundly rejected all discussions almost immediately. I learned a long time ago to never say never, but there are only a few circumstances in which we would entertain the thought of a reverse split. When the company is achieving revenue and when the company can, on a consistent basis release positive news and when we can show growth and value for our shareholders, we may consider a reverse split. But even then, we would only do so in order to provide us with a clear and immediate path to NASDAQ, AMEX or the NYSE. A reverse split at this juncture would only boost the stock momentarily and then the stock would free fall.
As I have told everyone, we are in this for the long haul. We are all aerospace guys and know that in our business it is a marathon, not a sprint. We will continue to exhibit patience and persistence and remain confident in our plan, our path and our goals.
Regards,
Bill McKay, CEO


SHAREHOLDER REACTIONS
I wanted to post a recent email I received from a shareholder together with my response. I believe his or her sentiments may be shared by others. I have deleted the person's name and email address for purposes of privacy.
"Dear Bill
After TPAC stock falling for what seems an eternity it looked like some interest was building. You say you are buyers of the stock at these levels one day then you drop a late Friday Afternoon Authorized increase to 4.5 billion the next? After what happened with that joint venture as soon as it looks like the PPS might increase you pull this? You're just going to end up with a board full of bashers that will never let your stock rise and posting what a crook you are and a scam TCAP is. I just don't understand unless you can explain, hey I guess we look for better companies and let the bashers have TPAC.
Good Luck"

My response is as follows:
I have spent the better part of the last 4 years in China working on this project. I have done everything I have promised to do. We said that we would get our factory and products qualified with NAVAIR. We did that. We said that we would manufacture prototype aluminum bearings for Chinese domestic use and we did that. So I deeply resent the implication that TPAC is a scam or that I am a crook. I understand that emotions often run high so I will chalk these comments up to emotions.
Nevertheless, I will explain why we increased the number of authorized shares. Under the terms of our convertible note agreements, we must keep in reserve a certain number of shares for the note holders. These shares can only be used by those note holders to convert under their respective notes. The number of shares to be reserved is generally three times the number of shares needed to convert. However, if the share price drops, as it has, they can convert more shares and therefore need more shares in reserve. That is not to say that all of these shares will be converted and therefore enter the float. In all likelihood they will not. Nevertheless we have contractual obligations to maintain these reserves.
This increase in authorized shares did not increase the float by one share. But we did want to have a bank of shares we as insiders could acquire should we need to do so in order to maintain control of the company and thereby stay on our intended path.
With respect to the joint venture, we have done all that we could in that regard. The one mistake that we did make in hindsight was focusing on one potential partner for a long period of time. However, we believed that a partner who wanted to sign an LOI and showed a strong interest and desire to form a JV, would actually do so. We cannot force anyone to sign an agreement. We can only fulfill our obligations in working toward a JV. We did fulfill those obligations, but were unable to get the other side to sign on the dotted line. Therefore we have been aggressively pursuing other potential partners and we are hopeful that we will get an agreement in place shortly.
I cannot control what people say on boards. Everyone is entitled to their opinion. But I can tell you that I have invested a very very substantial amount of time and money on this project. I was hospitalized for a month last year as a direct result of work on this project. However, we continue to move forward and I am extremely confident in our future success. I am probably more critical of what we are doing than anyone else, but I have a clear conscience in regard to our path and have a clear vision of our goal and our success. Should you feel differently, I understand, but we will remain steadfast.
Regards,
Bill McKay, CEO