Mysterium & DJknows, I'm sortof directing the following to you because you seem to have the longest history and most complete background info on TPAC. I know it's long, but hoping you might offer some insight and clarity, especially in light of the recent situation with the reported Common Share structure.
1) I am confused about what seems to be 2 different manufacturing companies and 2 different holding companies that were discussed over the same time frame last year - in the June 9 PR and the July 31 ending 10-Q
a) a Guangzhou, China manufacturing facility, held by "our" 55%-owned subsidiary Godfrey (China) Limited, a Hong Kong corporation.
-and-
b) TPAC Aerospace Limited, a Dongguan, China full production facility / manufacturing company 100% owned by TPAC China, which is owned by the doctors, TPAC and Bill McKay.
Can you add any clarity to this?
2) I am trying to get a handle on Market Cap / Enterprise Value for estimating future EPS. This is of course dependent on the above. But whatever may be the case with the above I am generally assuming that TPAC (shareholders) actually owns ~55% of the manufacturing operations and, therefore, presumably ~55% of the eventual profit/earnings (could be less if TPAC actually owns a smaller percentage of TPAC China and if, in fact, TPAC China is now "the" (only) holding company of the China full-scale production/manufacturing operation.
Additionally, I estimate that, as of July 31, 2015, there were 3,077 convertible preferred shares issued/outstanding, convertible at the owners option for 1,000,000 Common Shares for each preferred share.
Since July 31, 2015, there have been a large number of Common Shares retired from the O/S and presumably converted to convertible preferred shares - I think about 1,300,000,000 Common Shares - and so that would give an additional 1,300 preferred shares issued but perhaps not yet outstanding (treasury stock).
Additionally, Bill mentioned in a tweet last night that there were a small number of additional preferred shares issued in connection with recent/ongoing transactions.
One of my concerns is that there has been a lot of time between July 31, 2015 and Bill's tweet last night, so there may be more preferred shares issued in connection with other business between July 31, 2015 and now. And there has been no filing / disclosure to give us a clear picture of the preferred share structure or details about how the Common stock O/S is being reduced. Thus, my assumption about the 1,300 preferred shares associated with this... but it still doesn't tell me how the Common shares were "acquired" in order to be "retired" and converted to preferreds, and I don't know if these preferred shares subsequently become outstanding.
Normally - "technically" - market cap is calculated based on the O/S (Common Stock). However, in this case, since the preferred shares are simply "convertible preferred shares" that are a roll-up conversion of Common Stock at a 1,000,000 to 1 ratio and then sold or awarded to accredited investors, "consultants" and the employee... I look at them as part of the market cap. (technically, preferred shares are normally not included in the market cap computation, only the "enterprise value" computation).
So aside the question of actual preferred shares outstanding due to possible sales or awards from treasury stock, there are currently at least 3,077 preferred shares outstanding. This is, for my market cap calculation equivalent to 3,077,000,000 shares of common stock.
Adding the recently updated common stock O/S of 2,944,402,694 gives a total of 6,021,402,694 shares. Using yesterday's closing price of $0.0039, this gives a market cap of ~$23.5M.
Using the figure of 55% ownership - if this is correct - of the China operations, this is like saying TPAC shareholders own 55% of the shares, which gives an equivalent total ownership equal to 1,094,800,000,000. That is, the approximate 6.02B shares of TPAC (held by all TPAC shareholders) claims ownership, voting, dividends, etc. of 55% of approximately 1.1B shares in the overall soon-to-be profit-generating enterprise. To me, this effectively increase the market cap - or you can just say the enterprise value since that's more "technically correct" - to a total of $23.6M / 55% = $42.9M (again, this is based on a share price of $0.0039).
Do you see anything wrong with these calculations or somewhat ill-informed assumptions?
I hope this is all laid out more clearly in the upcoming report, but I'd really like to learn as much as I can before the report is filed - for obvious reasons.
SOURCE INFORMATION - 2015Q3 10-K (period ending July 31, 2015)
NOTE 7 - it is noted that 319,566,106 shares of common stock were retire and converted to 325 shares of convertible preferred stock.
It is further noted that the Company issue 613 shares of convertible preferred stock to its employee and consultants for services rendered.
And then, "In June 2015, the company entered into various purchase agreements with accredited investors for the sale of 220 shares of its convertible preferred stock at a price of $100 per share" (or $0.0001 per common share, using the 1,000,000 conversion ratio of preferred-to-common).
There is no further notation on the "up-converted" 325 shares, but it is further stated that as of July 31, 2015, there were 938 shares issued and outstanding.
It is difficult to "read between the lines" here, because something doesn't add up quite right. If 613 shares were "issued" to the employee (Bill) and consultants, and 220 shares were sold (issued) to accredited investors, then it may be that 938 shares were issued, and only 833 shares were outstanding - if indeed the 325 shares were initially "treasury" stock (issued but not outstanding).
NOTE 8 - it is noted that in August 2015, 340,251,028 shares of common stock were converted to 355 shares of convertible preferred stock ("issued" treasury stock??), and that in August/September 2015, the Company issued 2,139 shares of convertible preferred stock as compensation to consultants and employee for services rendered (issued and outstanding).
So adding the 938 shares as of July 31, 2015 - if indeed that number is correct - to the 2,139 shares in August 2015 it appears that, as of September 21, 2015, there were 3,077 convertible preferred shares issued/oustanding.
Item 2. (Management's Discussion and Analysis of Financial Condition and Results of Operation) - it is stated that the difference in net loss from operations between nine months ending July 31, 2015 and 2014 was $4,582,913 - $2,763,524 = $1,819,389 and was primarily resulted from issuance of common stock options to board of directors. This appears in the Consolidated Statements of Cash Flows as "Stock based compensation" in the amount of $3,607,500 for 2015 as compared to $1,644,896 for 2014, a net increase of $1,962,604.
In the Overview paragraphs of this section, it is shown that "our" production facility in Guangzhou, China is held and operated by "our" 55%-owned subsidiary, Godfrey (China) Limited, a Hong Kong corporation.
SOURCE INFORMATION - June 9, 2015 PR: "TPAC To Commence Full-Scale Production in China"
It is stated that TPAC is starting full production at facilities in Dongguan, China. It further states that financing from the doctors "will allow TPAC to form TPAC China, a Hong Kong company, which will own 100 percent of the manufacturing company in China, TPAC Aerospace Limited" and that the doctors "are founders and owners of TPAC China, along with TPAC and Bill McKay. TPAC will manage all operations in China..."
1) I am confused about what seems to be 2 different manufacturing companies and 2 different holding companies that were discussed over the same time frame last year - in the June 9 PR and the July 31 ending 10-Q
a) a Guangzhou, China manufacturing facility, held by "our" 55%-owned subsidiary Godfrey (China) Limited, a Hong Kong corporation.
-and-
b) TPAC Aerospace Limited, a Dongguan, China full production facility / manufacturing company 100% owned by TPAC China, which is owned by the doctors, TPAC and Bill McKay.
Can you add any clarity to this?
2) I am trying to get a handle on Market Cap / Enterprise Value for estimating future EPS. This is of course dependent on the above. But whatever may be the case with the above I am generally assuming that TPAC (shareholders) actually owns ~55% of the manufacturing operations and, therefore, presumably ~55% of the eventual profit/earnings (could be less if TPAC actually owns a smaller percentage of TPAC China and if, in fact, TPAC China is now "the" (only) holding company of the China full-scale production/manufacturing operation.
Additionally, I estimate that, as of July 31, 2015, there were 3,077 convertible preferred shares issued/outstanding, convertible at the owners option for 1,000,000 Common Shares for each preferred share.
Since July 31, 2015, there have been a large number of Common Shares retired from the O/S and presumably converted to convertible preferred shares - I think about 1,300,000,000 Common Shares - and so that would give an additional 1,300 preferred shares issued but perhaps not yet outstanding (treasury stock).
Additionally, Bill mentioned in a tweet last night that there were a small number of additional preferred shares issued in connection with recent/ongoing transactions.
One of my concerns is that there has been a lot of time between July 31, 2015 and Bill's tweet last night, so there may be more preferred shares issued in connection with other business between July 31, 2015 and now. And there has been no filing / disclosure to give us a clear picture of the preferred share structure or details about how the Common stock O/S is being reduced. Thus, my assumption about the 1,300 preferred shares associated with this... but it still doesn't tell me how the Common shares were "acquired" in order to be "retired" and converted to preferreds, and I don't know if these preferred shares subsequently become outstanding.
Normally - "technically" - market cap is calculated based on the O/S (Common Stock). However, in this case, since the preferred shares are simply "convertible preferred shares" that are a roll-up conversion of Common Stock at a 1,000,000 to 1 ratio and then sold or awarded to accredited investors, "consultants" and the employee... I look at them as part of the market cap. (technically, preferred shares are normally not included in the market cap computation, only the "enterprise value" computation).
So aside the question of actual preferred shares outstanding due to possible sales or awards from treasury stock, there are currently at least 3,077 preferred shares outstanding. This is, for my market cap calculation equivalent to 3,077,000,000 shares of common stock.
Adding the recently updated common stock O/S of 2,944,402,694 gives a total of 6,021,402,694 shares. Using yesterday's closing price of $0.0039, this gives a market cap of ~$23.5M.
Using the figure of 55% ownership - if this is correct - of the China operations, this is like saying TPAC shareholders own 55% of the shares, which gives an equivalent total ownership equal to 1,094,800,000,000. That is, the approximate 6.02B shares of TPAC (held by all TPAC shareholders) claims ownership, voting, dividends, etc. of 55% of approximately 1.1B shares in the overall soon-to-be profit-generating enterprise. To me, this effectively increase the market cap - or you can just say the enterprise value since that's more "technically correct" - to a total of $23.6M / 55% = $42.9M (again, this is based on a share price of $0.0039).
Do you see anything wrong with these calculations or somewhat ill-informed assumptions?
I hope this is all laid out more clearly in the upcoming report, but I'd really like to learn as much as I can before the report is filed - for obvious reasons.
SOURCE INFORMATION - 2015Q3 10-K (period ending July 31, 2015)
NOTE 7 - it is noted that 319,566,106 shares of common stock were retire and converted to 325 shares of convertible preferred stock.
It is further noted that the Company issue 613 shares of convertible preferred stock to its employee and consultants for services rendered.
And then, "In June 2015, the company entered into various purchase agreements with accredited investors for the sale of 220 shares of its convertible preferred stock at a price of $100 per share" (or $0.0001 per common share, using the 1,000,000 conversion ratio of preferred-to-common).
There is no further notation on the "up-converted" 325 shares, but it is further stated that as of July 31, 2015, there were 938 shares issued and outstanding.
It is difficult to "read between the lines" here, because something doesn't add up quite right. If 613 shares were "issued" to the employee (Bill) and consultants, and 220 shares were sold (issued) to accredited investors, then it may be that 938 shares were issued, and only 833 shares were outstanding - if indeed the 325 shares were initially "treasury" stock (issued but not outstanding).
NOTE 8 - it is noted that in August 2015, 340,251,028 shares of common stock were converted to 355 shares of convertible preferred stock ("issued" treasury stock??), and that in August/September 2015, the Company issued 2,139 shares of convertible preferred stock as compensation to consultants and employee for services rendered (issued and outstanding).
So adding the 938 shares as of July 31, 2015 - if indeed that number is correct - to the 2,139 shares in August 2015 it appears that, as of September 21, 2015, there were 3,077 convertible preferred shares issued/oustanding.
Item 2. (Management's Discussion and Analysis of Financial Condition and Results of Operation) - it is stated that the difference in net loss from operations between nine months ending July 31, 2015 and 2014 was $4,582,913 - $2,763,524 = $1,819,389 and was primarily resulted from issuance of common stock options to board of directors. This appears in the Consolidated Statements of Cash Flows as "Stock based compensation" in the amount of $3,607,500 for 2015 as compared to $1,644,896 for 2014, a net increase of $1,962,604.
In the Overview paragraphs of this section, it is shown that "our" production facility in Guangzhou, China is held and operated by "our" 55%-owned subsidiary, Godfrey (China) Limited, a Hong Kong corporation.
SOURCE INFORMATION - June 9, 2015 PR: "TPAC To Commence Full-Scale Production in China"
It is stated that TPAC is starting full production at facilities in Dongguan, China. It further states that financing from the doctors "will allow TPAC to form TPAC China, a Hong Kong company, which will own 100 percent of the manufacturing company in China, TPAC Aerospace Limited" and that the doctors "are founders and owners of TPAC China, along with TPAC and Bill McKay. TPAC will manage all operations in China..."
