SOURCE: WPCS International Inc

WPCS International Inc

July 21, 2017 19:05 ET

WPCS Announces Financial Results for Fiscal Year Ended April 30, 2017

Suisun City Operations Continue Profitability

SUISUN, CA--(Marketwired - Jul 21, 2017) - 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, announced that today it filed its Annual Report on Form 10-K, for the fiscal year ended April 30, 2017.

Sebastian Giordano, CEO of WPCS, commented, "Operational results this past year demonstrated that our sole business, Suisun City Operations, continues to perform profitably as it generated $1,064,000 in operating income on revenues of approximately $15,731,000."

Financial Results for the Year Ended April 30, 2017

Revenue for the twelve months ended April 30, 2017 increased by approximately $2,182,000, or 15%, to approximately $16,737,000, as compared to approximately $14,555,000, for the same period in 2016. Such increase was due primarily to revenue increases in our: (i) Suisun City Operations of approximately $1,177,000, and (ii) Texas Operations of approximately $1,005,000. Notwithstanding the foregoing, we do not anticipate any further revenues from the Texas Operations since it was closed in the fourth quarter of 2017.

The Company's loss from continuing operations for the year ended April 30, 2017 was approximately $1,219,000, due primarily to an approximate $2,545,000 operating loss, interest expense of approximately $7,000 and income tax provision of approximately $3,000, which were partially offset by income from various settlements totaling approximately $1,192,000 and other income of approximately $143,000. This compared to a loss from continuing operations of approximately $3,631,000 for the same period in 2016. Meanwhile, the net loss attribute to WPCS common shareholders for the year ended April 30, 2017 was approximately $2,256,000, or $0.76 per share, as compared to a loss of approximately $8,270,000, or $3.61 per share, for the same period in 2016.

The $2,545,000 loss from operations was comprised primarily of approximately $1,043,000 in operating income from Suisun City Operations and which was offset by approximately $2,602,000 of corporate overhead expenses, of which approximately $580,000 related to non-cash compensation expense recognized on the issuance of employee stock options, and a loss from our Texas Operations of approximately $986,000. This compared to a net loss from operations of approximately $4,032,000 for the same period in 2016.

ABOUT WPCS INTERNATIONAL INCORPORATED

WPCS is a full-service, low-voltage solutions provider, installing and servicing integrated structured cabling, audio-visual and security systems for public services, healthcare, energy and corporate enterprise markets in the United States. The Company delivers end-to-end solutions, superior project management and best-in-class products and technology. For more information about WPCS, 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, other future conditions and the risk factors detailed from time to time in the Company's periodic filings with the Securities and Exchange Commission, including without limitation, the Company's Annual Report on Form 10-K for the year ended April 30, 2017. 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  
CONSOLIDATED BALANCE SHEETS  
    April 30,     April 30,  
    2017     2016  
ASSETS            
Current assets:                
  Cash and cash equivalents   $ 1,659,318     $ 2,235,597  
  Restricted cash     500,026       -  
  Accounts receivable, net of allowance of $247,000 and $92,000 at April 30, 2017 and 2016, respectively     4,199,674       2,886,154  
  Costs and estimated earnings in excess of billings on uncompleted contracts     410,826       357,210  
  Prepaid expenses and other current assets     41,135       66,256  
    Total current assets     6,810,979       5,545,217  
                 
Property and equipment, net     322,643       237,800  
                 
Other assets     11,484       21,162  
                 
Total assets   $ 7,145,106     $ 5,804,179  
                 
LIABILITIES AND EQUITY                
Current liabilities:                
  Current portion of loans payable   $ 52,946     $ 53,996  
  Accounts payable and accrued expenses     1,790,256       2,071,765  
  Billings in excess of costs and estimated earnings on uncompleted contracts     2,105,797       1,358,289  
    Total current liabilities     3,948,999       3,484,050  
                 
Loans payable, net of current portion     124,559       94,825  
Total liabilities     4,073,558       3,578,875  
                 
Commitments and contingencies                
                 
Stockholders' equity                
  Preferred stock - $0.0001 par value, 5,000,000 shares authorized at April 30, 2017 and 2016, respectively                
    Convertible Series H, 8,500 shares designated - 8 and 2,638 shares issued and outstanding at April 30, 2017 and 2016, respectively; liquidation preference of $1,000     1,242       406,262  
    Convertible Series H-1, 9,488 shares designated - 4,289 and 8,119 shares issued and outstanding at April 30, 2017 and 2016, respectively; liquidation preference of $712,000     437,530       699,324  
    Convertible Series H-2, 3,500 shares designated- 3,305 and 0 shares issued and outstanding at April 30, 2017 and 2016, respectively; liquidation preference of $400,000     230,721       -  
    Convertible Series H-3, 8,461 shares designated - 7,017 and 0 shares issued and outstanding at April 30, 2017 and 2016, respectively; liquidation preference of $968,000     475,185       -  
  Common stock - $0.0001 par value, 100,000,000 shares authorized, 3,352,159 and 2,691,055 shares issued and outstanding as of April 30, 2017 and 2016, respectively     335       269  
  Additional paid-in capital     89,003,669       85,940,389  
  Accumulated deficit     (87,077,134 )     (84,820,940 )
Total stockholders' equity     3,071,548       2,225,304  
                 
Total liabilities and stockholders' equity   $ 7,145,106     $ 5,804,179  
 
The accompanying notes are an integral part of these consolidated financial statements.
   
   
WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF OPERATIONS  
    For the years ended  
    April 30,  
    2017     2016  
                 
Revenue   $ 16,736,991     $ 14,555,102  
                 
Costs and expenses:                
  Cost of revenue     12,893,901       11,570,364  
  Selling, general and administrative expenses     6,272,138       6,951,637  
  Depreciation and amortization     115,454       64,738  
      19,281,493       18,586,739  
                 
Operating loss     (2,544,502 )     (4,031,637 )
                 
Other income (expense):                
  Interest expense     (6,621 )     (3,196 )
  Income from Section 16 settlement     -       400,000  
  Income from Arbitration settlement     1,192,246       -  
  Other income     143,178       5,284  
                 
Loss from continuing operations before income tax provision     (1,215,699 )     (3,629,549 )
Income tax provision     3,130       1,706  
Loss from continuing operations     (1,218,829 )     (3,631,255 )
                 
Discontinued operations:                
  Income from discontinued operations     -       27,261  
  Gain from disposal     -       837,720  
Consolidated net loss     (1,218,829 )     (2,766,274 )
Net income attributable to noncontrolling interest     -       16,505  
Net loss attributable to WPCS     (1,218,829 )     (2,782,779 )
Dividends declared on preferred stock     -       (4,742,768 )
Deemed dividend on convertible preferred stock, due to beneficial conversion feature     (1,037,365 )     (744,499 )
Net loss attributable to WPCS common shareholders   $ (2,256,194 )   $ (8,270,046 )
                 
Basic and diluted loss from continuing operations per common share   $ (0.76 )   $ (3.98 )
Gain from disposal     -       0.37  
Basic and diluted net loss per common share   $ (0.76 )   $ (3.61 )
                 
Basic and diluted weighted average number of common shares outstanding     2,967,984       2,290,050  
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
    For the years ended  
    April 30,  
    2017     2016  
Operating activities:                
  Net loss from continuing operations   $ (1,218,829 )   $ (3,631,255 )
  Consolidated net income from discontinued operations     -       864,981  
Adjustments to reconcile net loss to net cash provided by operating activities:                
  Depreciation and amortization     115,454       64,738  
  Shares based compensation     602,431       2,506,239  
  Gain on sale of China Operations     -       (837,720 )
  Income on Section 16 settlement     -       (400,000 )
  Changes in operating assets and liabilities:                
    Accounts receivable     (1,313,520 )     3,608,736  
    Costs and estimated earnings in excess of billings on uncompleted contracts     (53,616 )     63,224  
    Current assets held for sale     -       (3,853,621 )
    Prepaid expenses and other current assets     25,121       93,513  
    Other assets     9,678       4,222  
    Other assets held for sale     -       (34,523 )
    Accounts payable and accrued expenses     (281,509 )     (3,342,504 )
    Current liabilities held for sale     -       2,200,030  
    Billings in excess of costs and estimated earnings on uncompleted contracts     747,508       11,828  
Net cash used in operating activities     (1,367,282 )     (2,682,112 )
                 
Investing activities:                
  Acquisition of property and equipment     (77,272 )     (139,552 )
  Proceeds from sale of China Operations, net of acquisition cost     -       1,325,744  
Net cash (used in) provided by investing activities     (77,272 )     1,186,192  
                 
Financing activities:                
  Proceeds from issuance of Series H-1 preferred stock and warrants     -       1,575,000  
  Proceeds from issuance of Series H-2 preferred stock and warrants, net of offering costs     429,631       -  
  Proceeds from issuance of Series H-3 preferred stock and warrants, net of offering costs     1,033,011       -  
  Borrowings under loan payable obligations     -       115,753  
  Repayment under loan payable obligations     (94,341 )     (51,106 )
  Repayments under other payable to Zurich     -       (360,000 )
  Repayments of short term convertible note     -       (4,000 )
Net cash provided by financing activities     1,368,301       1,275,647  
                 
Effect of exchange rate changes on cash     -       91,510  
                 
Net decrease in cash, cash equivalents and restricted cash     (76,253 )     (128,763 )
Cash, cash equivalents and restricted cash beginning of the year     2,235,597       2,364,360  
Cash, cash equivalents and restricted cash end of the year   $ 2,159,344     $ 2,235,597  
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
      For the years ended
      April 30,
      2017     2016
Schedule of non-cash investing and financing activities:                
  Automobile loan payable obligations     $ 123,025     $ -
  Declaration on preferred dividend payable     $ -     $ 4,742,768
  Issuance of warrants with Series H-2 preferred stock     $ 231,248     $ -
  Beneficial conversion feature of Series H-2 convertible preferred stock     $ 183,284     $ -
  Deemed dividends related to immediate accretion of beneficial conversion feature of Series H-2 convertible preferred stock     $ 183,284     $ -
  Issuance of warrants with Series H-3 preferred stock     $ 557,826     $ -
  Beneficial conversion feature of Series H-3 convertible preferred stock     $ 476,375     $ -
  Deemed dividends related to immediate accretion of beneficial conversion feature of Series H-3 convertible preferred stock     $ 476,375     $ -
  Conversion of dividends payable related to make-whole amount to common stock     $ -     $ 4,457,356
  Conversion of dividends payable related to Series F-1 preferred stock     $ -     $ 624,977
  Conversion of dividends payable related to Series G-1 preferred stock     $ -     $ 337,981
  Conversion of short term convertible note to Series H preferred stock     $ -     $ 1,299,000
  Conversion of Series F and F-1 preferred stock through the issuance of common stock     $ -     $ 3,292,741
  Conversion of Series G and G-1 preferred stock through the issuance of common stock     $ -     $ 1,827,927
  Conversion of Series H preferred stock through the issuance of common stock     $ 405,020     $ 892,738
  Conversion of Series H-1 preferred stock through the issuance of common stock     $ 639,500     $ 75,000
  Deemed dividend on conversion of Series H-1 convertible preferred stock to common stock     $ 377,706     $ -
 
The accompanying notes are an integral part of these consolidated financial statements.

Contact Information

  • INVESTOR CONTACT

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