Thinspace Technology Inc (OTCMKTS:THNS) Slips Again

Thinspace Technology Inc (OTCMKTS:THNS) dropped from over $0.10 per share at the beginning of April to less than $0.01 just two months later. Despite this, a couple of weeks ago, people started buying the stock and they pushed it back out of the sub-penny levels pretty quickly. Why?

The answer is fairly simple. The management team certainly played their role when they issued a press release on July 1 and said that AlarmForce Industries Inc. has chosen Thinspace as its desktop virtualization provider. Then, the pumpers came along as well, and after pocketing a substantial amount of money, they tried to convince investors that THNS is a great stock to own.

Unfortunately, the excitement dissipated rather quickly and THNS took a few nasty blows which pushed it back down to less than $0.005. It did try to bounce last week, but it slipped again on Friday and after a 14% haircut, it stopped at a little over $0.006 per share. A few minutes after today’s opening bell, it’s another 8% down.

Clearly, THNS couldn’t really cope with the pressure. Once again, the question is: Why?

This time, the answer is a bit more complicated. On the one hand, the pumpers’ presence alone could be enough to upset the ticker’s performance, but on the other, THNS is an operating entity that has been generating a relatively healthy amount of revenues for a while. During Q1, for example, they logged about $790 thousand in sales which is an increase both on a quarter-over-quarter and on a year-over-year basis.

Unfortunately, the rest of the 10-Q doesn’t look quite as promising:

• cash: $166 thousand
• current assets: $785 thousand
• current liabilities: $15.7 million
• quarterly net loss: $272 thousand

The underwhelming financials are certainly deterring some people away from the stock and this means that profit opportunities are not that big and not that many. At least for the retail investors. The holders of convertible notes are having it much easier.

We have discussed the matter in our previous articles, but it’s still worth repeating that at the end of Q1, there was quite a lot of debt outstanding which was eligible for conversion at discounts ranging from 30% to 60%. As a result, during April and May, when the ticker’s market price hovered between $0.03 and $0.10 per share, the aforementioned note holders got more than 6 million shares at just over $0.02.

We’ve no idea how much more convertible debt has been turned into stock, but it’s fair to say that the people who are eligible to receive discounted shares were presented with a big profit window when the ticker surged above the $0.01 mark. Did they take their gains? And if they did, was that the reason for THNS‘ appalling performance?

It’s up to you to decide.