SOURCE: WPCS International Inc.

WPCS International Inc.

September 13, 2016 09:00 ET

WPCS Announces Financial Results for First Quarter Ended July 31, 2016

Company Shows $557,000 Net Income to Common Shareholders

SUISUN, CA--(Marketwired - Sep 13, 2016) - WPCS International Incorporated (NASDAQ: WPCS), a full-service low-voltage solutions provider in the business of developing, installing and servicing integrated structured cabling, audio-visual and security systems, today announced that on September 12, 2016, it filed its Form 10-Q, Quarterly Report for the first quarter ended July 31, 2016.

Sebastian Giordano, CEO of WPCS, commented, "With more than a $4.7 million swing over the same period last year, going from a net loss to net income to common shareholders, we are pleased with our first quarter results, which continue to demonstrate that we are headed in the right direction. Looking ahead, we have a number of new initiatives in play that we believe will produce solid results in the quarters ahead." 

Financial Results for the Three Months Ended July 31, 2016

Revenue for the three months ended July 31, 2016 decreased $1,048,000, or 23%, to $3,416,000, as compared to $4,464,000, for the same period in 2015. Such decrease was due primarily to a $1,310,000 decrease in revenue in our Suisun City Operations related to work on one major contract, which was effectively completed during the last fiscal year, and which was partially offset by revenues of approximately $262,000 from our newly established Texas Operations.

We generated a net income to common shareholders for the three months ended July 31, 2016 of approximately $557,000, as compared to a net loss of approximately $4,182,000 for the same period last year. This quarter's results were comprised of income from: (i) Suisun City Operations of approximately $207,000 and (ii) corporate division of approximately $657,000, which is comprised of a gain on an arbitration settlement of $1,150,000 and reduced by corporate expenses of approximately $495,000; and which was partially offset by a loss from our newly established Texas Operations of approximately $307,000.

ABOUT WPCS INTERNATIONAL INCORPORATED

WPCS provides contracting services to the public services, healthcare, energy and corporate enterprise markets in the United States. For more information, please visit www.wpcs.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including, but not limited to, statements with respect to the Company's future growth opportunities and strategic plan. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise. 

   
WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES  
   
CONDENSED CONSOLIDATED BALANCE SHEETS  
(UNAUDITED)  
   
    July 31,     April 30,  
    2016     2016  
             
ASSETS                
Current assets:                
  Cash and cash equivalents   $ 1,939,900     $ 2,235,597  
  Accounts receivable, net of allowance of $92,000 at July 31, 2016 and April 30, 2016, respectively     4,328,118       2,886,154  
  Costs and estimated earnings in excess of billings on uncompleted contracts     437,185       357,210  
  Prepaid expenses and other current assets     123,977       66,256  
    Total current assets     6,829,180       5,545,217  
                 
Property and equipment, net     298,559       237,800  
                 
Other assets     24,940       21,162  
                 
Total assets   $ 7,152,679     $ 5,804,179  
                 
LIABILITIES AND EQUITY                
Current liabilities:                
  Current portion of loans payable   $ 60,848     $ 53,996  
  Accounts payable and accrued expenses     2,276,717       2,071,765  
  Billings in excess of costs and estimated earnings on uncompleted contracts     1,901,295       1,358,289  
    Total current liabilities     4,238,860       3,484,050  
                 
Loans payable, net of current portion     108,833       94,825  
Total liabilities     4,347,693       3,578,875  
                 
Commitments and contingencies                
                 
Stockholders' equity                
  Preferred stock - $0.0001 par value, 5,000,000 shares authorized at July 31, 2016 and April 30, 2016, respectively                
    Convertible Series H, 8,500 shares designated, - 2,638 shares issued and outstanding at July 31, 2016 and April 30, 2016, respectively; liquidation preference of $406,000     406,262       406,262  
    Convertible Series H-1, 9,488 shares designated, - 8,119 shares issued and outstanding at July 31, 2016 and April 30, 2016, respectively; liquidation preference of $1,348,000     699,324       699,324  
  Common stock - $0.0001 par value, 100,000,000 shares authorized, 2,706,159 and 2,691,055 shares issued and outstanding as of July 31, 2016 and April 30, 2016, respectively     271       269  
  Additional paid-in capital     85,962,888       85,940,389  
  Accumulated deficit     (84,263,759 )     (84,820,940 )
Total stockholders' equity     2,804,986       2,225,304  
                 
Total liabilities and stockholders' equity   $ 7,152,679     $ 5,804,179  
                 

 The accompanying notes are an integral part of these condensed consolidated financial statements.

   
   
WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES  
   
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(UNAUDITED)  
   
    For the three months ended  
    July 31,  
    2016     2015  
             
Revenue   $ 3,416,453     $ 4,464,003  
                 
Costs and expenses:                
  Cost of revenue     2,635,508       3,447,203  
  Selling, general and administrative expenses     1,352,986       1,312,803  
  Depreciation and amortization     20,666       14,969  
      4,009,160       4,774,975  
                 
Operating loss     (592,707 )     (310,972 )
                 
Other income (expense):                
  Interest expense     (1,981 )     (892 )
  Income from Section 16 settlement     -       400,000  
  Income from Arbitration settlement     1,150,000       -  
  Other income (expense)     4,487       (2,906 )
                 
Income from continuing operations before income tax provision     559,799       85,230  
Income tax provision     2,618       1,099  
Income from continuing operations     557,181       84,131  
                 
Discontinued operations:                
  Income from discontinued operations     -       41,261  
Consolidated net income     557,181       125,392  
Net income attributable to noncontrolling interest     -       16,505  
Net income attributable to WPCS     557,181       108,887  
Dividends declared on preferred stock     -       (3,587,121 )
Deemed dividend on convertible preferred stock, due to beneficial conversion feature     -       (703,770 )
Net income (loss) attributable to WPCS common shareholders   $ 557,181     $ (4,182,004 )
                 
Basic income (loss) from continuing operations per common share   $ 0.21     $ (2.86 )
Basic income from discontinued operations per common share     -       0.02  
Basic income (loss) per common share   $ 0.21     $ (2.84 )
                 
Diluted income (loss) from continuing operations per common share   $ 0.14     $ (2.86 )
Diluted income from discontinued operations per common share     -       0.02  
Diluted income (loss) per common share   $ 0.14     $ (2.84 )
                 
Weighted average shares outstanding - basic     2,701,404       1,470,248  
Weighted average shares outstanding - diluted     3,937,628       1,470,248  
                 

The accompanying notes are an integral part of these condensed consolidated financial statements.

   
   
WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES  
   
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
(UNAUDITED)  
   
    For the three months ended  
    July 31,  
    2016     2015  
Operating activities:                
  Net income from operations   $ 557,181     $ 84,131  
  Consolidated net income from discontinued operations     -       41,261  
Adjustments to reconcile consolidated net income to net cash (used in) provided by operating activities:                
  Depreciation and amortization     20,666       14,969  
  Shares based compensation     22,501          
  Income on Section 16 settlement     -       (400,000 )
  Changes in operating assets and liabilities:                
    Accounts receivable     (1,441,964 )     1,424,935  
    Costs and estimated earnings in excess of billings on uncompleted contracts     (79,975 )     (103,324 )
    Current assets held for sale     -       (506,215 )
    Prepaid expenses and other current assets     (57,721 )     84,464  
    Other assets     (3,778 )     -  
    Other assets held for sale     -       (34,522 )
    Income taxes payable     -       (2,658 )
    Accounts payable and accrued expenses     204,952       (1,277,741 )
    Current liabilities held for sale     -       2,200,030  
    Billings in excess of costs and estimated earnings on uncompleted contracts     543,006       125,355  
Net cash (used in) provided by operating activities     (235,132 )     1,650,685  
                 
Investing activities:                
  Acquisition of property and equipment     (30,803 )     (10,707 )
Net cash used in investing activities     (30,803 )     (10,707 )
                 
Financing activities:                
  Proceeds from issuance of Series H-1 preferred stock and warrants     -       1,575,000  
  Borrowings under loan payable obligations     -       7,762  
  Repayment under loan payable obligations     (29,762 )     -  
  Repayments under other payable to Zurich     -       (135,000 )
  Repayments of short term convertible note     -       (4,000 )
Net cash (used in) provided by financing activities     (29,762 )     1,443,762  
                 
Effect of exchange rate changes on cash     -       91,510  
                 
Net (decrease) increase in cash and cash equivalents     (295,697 )     3,175,250  
Cash and cash equivalents, beginning of the period     2,235,597       2,364,360  
Cash and cash equivalents, end of the period   $ 1,939,900     $ 5,539,610  
                 

 The accompanying notes are an integral part of these condensed consolidated financial statements.

 
 
WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
 
    For the three months ended
    July 31,
    2016   2015
Schedule of non-cash investing and financing activities:            
  Asset financing   $ 50,622   $ -
  Declaration on preferred dividend payable   $ -   $ 3,587,121
  Warrants issued with convertible preferred stock   $ -   $ 841,405
  Deemed dividend on conversion of preferred stock to common stock   $ -   $ 703,770
  Conversion of dividends payable related to make-whole amount to common stock   $ -   $ 3,375,792
  Conversion of dividends payable related to Series F-1 preferred stock   $ -   $ 501,826
  Conversion of dividends payable related to Series G-1 preferred stock   $ -   $ 158,481
  Conversion of short term convertible note to Series H preferred stock   $ -   $ 1,299,000
  Conversion of Series F and F-1 preferred stock to common stock   $ -   $ 2,731,984
  Conversion of Series G and G-1 preferred stock to common stock   $ -   $ 1,084,230
  Conversion of Series H preferred stock to common stock   $ -   $ 691,768
               

 The accompanying notes are an integral part of these condensed consolidated financial statements.

Contact Information

  • INVESTOR CONTACT

    WPCS International Incorporated
    Mr. David Allen
    Chief Financial Officer
    Phone: 707-759-6008
    Email: Email Contact