One day after seeing their trading volume top 206 million Tactical Air Defense Services, Inc. (OTCQB: TADF) continues to generate substantial activity, pushing beyond the 68 million mark by noon on Wednesday. Perhaps even more impressive than TADF’s trading volume is the fact that shares of the aerospace/defense services contractor reached a new 52-week high on Wednesday, hitting 0.0200, a staggering mark considering the company was trading as low as 0.0006 two weeks ago.
Wednesday’s 52-week high came as TADF, which offers tactical aviation services, aircraft maintenance, and other aerospace/defense services to the United States and Foreign militaries and agencies, announced that through their wholly-owned subsidiary, AeroTech Corporation, they had received their aircraft dealers’ certificate from the U.S. Federal Aviation Administration-Department of Transportation.
While TADF certainly played the announcement up the positive reaction on Wednesday likely had more to do with a promotional campaign focusing on the company. As has been seen on countless occasions, when that promotion ends the momentum TADF has seemingly built will probably end as well.
By TADF’s own admission Wednesday’s announcement doesn’t even fit into their core business strategy, that strategy being, in the words of company CEO Alexis C. Korybut, “purchasing military aircraft in order to deliver aerial training services to the U.S. and foreign militaries.”
Despite being outside their core business strategy Korybut stated “Although we do not anticipate that aircraft brokerage will become a core business of TADF, we do believe that it can provide additional opportunities to earn revenue ancillary to our core strategy.” Whether or not this happens is obviously yet to be seen but what is known is that the current revenues being brought in from core business operations aren’t exactly getting the job done.
As pointed out by TADF in their annual report released on August 2, 2012 they generated no revenue for the years ended December 31, 2010 or 2011. Alongside having no revenue TADF racked up net losses of $1.3 million in 2010 and $1.5 million in 2011; listed no assets at December 31, 2011 and had no cash on hand. It’s pretty difficult to forecast good things for a company with no assets, no cash, and substantial losses.
Of course TADF has billed the recent acquisition of AeroTech Corporation, announced on August 3, 2012, as a step toward remedying their financial woes. That acquisition gives TADF 100% of the existing business, assets, management, and outstanding stock of AeroTech in exchange for consideration of 5 million shares of TADF’s Series C Preferred stock.
Needless to say that’s not going to benefit those who are currently holding common shares.
As for the assets acquired in the deal TADF picked up, among others, four Teaming Agreements “with a well known U.S. defense contractor that has existing aviation services contracts and other U.S. and foreign government services contracts”; one Teaming Agreement with Convergent Performance, LLC; and one Sole Source Justification and Approval from a division of the U.S. Army to provide Electronic Attack, Electronic Protect, and Electronic Support.
This may sound positive but investors should make sure they’re not putting the cart before the horse on this one; none of those assets are necessarily a path to revenue. Korybut even said about the assets, “We furthermore anticipate acquiring or leasing certain military aircraft in order to fulfill certain aerial services contracts by the U.S. and/or foreign militaries that we anticipate but cannot guarantee we will be awarded.”
For a company that has yet to prove it can generate any revenue the activity surrounding their stock should be looked at with eyes wide open. Until TADF issues a press release announcing a contract that will produce revenue then there is substantial reason to be cautious with this company.