Borislav Tonev

TechPrecision Corp (OTCMKTS:TPCS) Spikes Above $1.20

by Borislav Tonev December 27, 2013
4TPCS.pngAs you probably know, TechPrecision Corp (OTCMKTS:TPCS, TPCS message board) is one of the relatively solid, operating entities on the OTC Markets. They have been offering a variety of services related to the manufacture of precision components and equipment for some time now. This means that the revenues section of their financial statements has had some numbers under it for years which is not that common for a penny stock. That said, it hasn't been all plain sailing.

A quick look through the reports from years gone by reveals that sales figures have been somewhat shaky and while some of the periods have ended with a positive bottom line, consistent profitability has been elusive.

In an attempt to combat this, TPCS appointed Mr. Leonard Anthony as the company CEO back in May. He is supposed to implement a restructuring plan which will hopefully reduce the expenses and bring the company back on track. Time will tell if he will be able to do it, but looking at the report which covers the quarter ended September 30, we can see that things are not off to the best of starts. Here's a quick rundown of the most important figures found in the 10-Q:

  • cash: $1.5 million
  • current assets: $11.6 million
  • current liabilities: $10 million
  • quarterly revenues: $5.1 million
  • quarterly net loss: $818 thousand

A quick glance at the report reveals that between March 31 and September 30, TPCS have managed to pay off some of the debt, but they have also burned through quite a lot of cash. They are still in default on a loan and security agreement with Sovereign Bank but, perhaps more worryingly, revenue generation seems to be as inconsistent as ever. The sales for the third calendar quarter of 2013, for example, are 35% down compared to the same period of 2012 while the net loss has been increased significantly.

All in all, we can safely say that TPCS' 10-Q is rather disappointing and yet, the chart at the beginning of the article suggests that it's not all bad news. In fact, yesterday, the ticker registered its fifth consecutive green session and reached a new 52-week high of $1.25.

0TPCS_logo.jpgIndeed, there are some positive developments. For one, we read in the 10-Q that they reduced their workforce back in October which should result in decreased expenses over the coming periods. On November 14, just hours after the appearance of the quarterly report, they announced a contract according to which TPCS will need to manufacture $8.1 million worth of Sapphire chambers by the end of May 2014. During the earnings call that was held minutes after the issuance of the press release, the management team said that despite the reduced workforce, they should have no problems with delivering the products on time. As an added bonus, TPCS' Sapphire chambers will be used in the production of components for Apple Inc. (NASDAQ:AAPL)'s iPhone which is always a guarantee to grab investors' attention.

Apparently, other people are keeping a close eye on the ticker as well. A Seeking Alpha contributor called Mark Gomes wrote an article on December 22 saying that TPCS' share price will triple and, although some of you might consider his predictions to be a bit too optimistic, it's clear that they did have an effect on the stock performance. How long-lasting the surge will be, however, remains to be seen.

One thing is for sure - the longer-term chart movement, can only be influenced by the future financial statements which is why a potential TPCS investment still has its risks. Considering them carefully is absolutely essential before putting any money on the line.

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