William McKay, the CEO of Trans-Pacific Aerospace Company Inc (OTCMKTS:TPAC) updated on company’s developments few months ago. In a press release, the CEO said that the discussions with TPAC’s probable joint venture partner have been going well. The management team is taking all measures it can to pay off the outstanding Notes before the due date. He stated that the company successfully finished the shipment of its first order.

The performance

Trans-Pacific Aerospace filed the 10-Q for the quarter ended January 31, 2015. When the CEO said that the company has completed its first shipment many people believed that it is the first step towards revenue generation process. However, the report tells a different story. It states that the company didn’t started revenue generating operations and also do not expect to begin it until 4Q2015.

The financials

As per the report, Trans-Pacific Aerospace Company Inc (OTCMKTS:TPAC) had cash of $36,000. The current assets stood at $40,000 whereas the current liabilities came at $912,000. The quarterly net loss was $1.5 million. Also, the report didn’t mention anything related to joint venture. The company has been serious problems on the debt front. During FY2014, the company entered into a number of convertible note deals in the aggregate principal amount of $325,000. All of the debt can be converted into TPAC’s common stock at discounts ranging from 40%-50%.

The concerns

Instead of offering the outstanding ones with cash, Trans-Pacific Aerospace issued $67,500 worth of new notes few weeks after McKay’s press release. The company’s authorized share count increased from 500 million to 1.5 billion in a matter of just two weeks. The dilution is quite catastrophic. In last quarter, Trans-Pacific Aerospace converted $46,000 worth of notes into 37.3 million shares. It indicates that the average conversion rate declined to $0.0012. Again, in between January 31 2015 and March 4, the count surged from 218 million to 497 million.