Borislav Tonev

TechPrecision Corp (OTCMKTS:TPCS) Tanks After Annual Results

by Borislav Tonev July 17, 2014

TechPrecision Corp (OTCMKTS:TPCS, TPCS message board) isn't really the best performing stock on the OTC Markets (putting it mildly). Just five months ago, for example, it was hovering comfortably above the $1 per share mark. Right now, it's sitting at just over $0.35. Which is something of a shame since TPCS is one of the relatively solid companies on the Over The Counter Board.

They have been around for a while and unlike other entities, they haven't changed their business plan since the very beginning. They have their operating subsidiaries and they have their revenues which is not something all OTC enterprises can brag about. That said, TPCS does have its problems.

On Tuesday, the company filed the 10-K covering the period ended March 31, 2014 and it presented the shareholders with the following figures:

  • cash: $1 million
  • current assets: $10.3 million
  • current liabilities: $12.4 million
  • yearly revenues: $21 million
  • yearly net loss: $7 million

As you can see, by penny stocks standards, TPCS' balance sheet doesn't appear to be too bad. Take a closer look, however, and you'll notice that things aren't quite so bright.

A comparison between the figures above and the ones found in the previous 10-K reveals that there's been a painful 35% drop in revenues year over year while the net loss has jumped by a mind-bending 187%. If you do some more digging around the filings, you'll see that between December 31, 2013 and March 31, 2014, they've managed to burn through a large portion of their cash reserves (at the end of last year, they had around $3.7 million in the bank). The debt has also grown during the first calendar quarter of 2014.

On the bright side, there are no signs of toxic financing activities, but even so, the threat of dilution should not be underestimated. It would appear that over the last year or so, some holders of Series A preferred stock have been eager to turn their holdings into common shares. During the twelve months ended March 31, they converted a total of 3,055,490 preferred shares into 3,994,134 common ones. On June 25, a further 718,959 common shares were issued as a conversion of preferred stock.

All in all,TPCS showed us that they're struggling at the moment and predictably, the market reacted. The 10-K came out just minutes before Tuesday's closing bell which means that investors didn't have much time to hit the panic button. Yesterday, however, they ran for the hills and the stock took the brunt of the impact. After six and a half hours of intense selling, TPCS logged a dollar volume of over $600 thousand and losses of more than 30%. About half an hour after today's opening bell, the stock is another 4% down.

There's little doubt in anyone's mind that the majority of investors were disappointed with the annual results, but there are probably some who reckon that the company will manage to pull through. They most likely consider the current price as a great entry point.

That might just be the case, but with so few updates on the company's operations, TPCS are having a hard time convincing us that they are finding ways of dealing with the problems. Hopefully, this will change very soon.

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