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.
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.
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.
Bill McKay, CEO