SUISUN, CA--(Marketwired - Jul 29, 2016) - WPCS International Incorporated (
Sebastian Giordano, CEO of WPCS, commented, "Operational results this past year demonstrated that our core business, Suisun City Operations, continues to perform profitably as it generated $1,064,000 in operating income on revenues of $14,555,000."
Financial Results for the Year Ended April 30, 2016
Revenue for the twelve months ended April 30, 2016 decreased $9,863,000, or 40%, to $14,555,000, as compared to $24,418,000, for the same period in 2015. Such decrease was attributable to the completion of one large customer contract during the prior fiscal year.
The Company's loss from continuing operations for the year ended April 30, 2016 was $3,631,000, due primarily from a $4,032,000 operating loss and interest expense of $3,200, which were partially offset by income from a Section 16 settlement of $400,000 and other income of $5,300. This compared to a loss from continuing operations of $6,998,000 for the same period in 2015.
The $4,032,000 loss from operations was comprised of $1,064,000 in operating income from the Suisun City Operations, which was offset by $4,813,000 of corporate overhead expenses, of which $2,439,000 related to non-cash compensation expense recognized on the issuance of employee stock options, a $237,000 loss from the start-up of our Texas Operations and the write-off of the remainder of the previously closed Trenton Operations assets of $47,000.
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 | ||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||
| April 30, | April 30, | |||||||||
| 2016 | 2015 | |||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 2,235,597 | $ | 2,364,360 | ||||||
| Accounts receivable, net of allowance of $92,000 at April 30, 2016 and April 30, 2015, respectively | 2,886,154 | 6,494,890 | ||||||||
| Costs and estimated earnings in excess of billings on uncompleted contracts | 357,210 | 420,434 | ||||||||
| Prepaid expenses and other current assets | 66,256 | 159,769 | ||||||||
| Current assets held for sale | - | 4,566,251 | ||||||||
| Total current assets | 5,545,217 | 14,005,704 | ||||||||
| Property and equipment, net | 237,800 | 162,986 | ||||||||
| Other assets | 21,162 | 11,384 | ||||||||
| Other assets held for sale | - | 977,119 | ||||||||
| Total assets | $ | 5,804,179 | $ | 15,157,193 | ||||||
| LIABILITIES AND EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Current portion of loans payable | $ | 53,996 | $ | 39,935 | ||||||
| Accounts payable and accrued expenses | 2,071,765 | 5,414,269 | ||||||||
| Billings in excess of costs and estimated earnings on uncompleted contracts | 1,358,289 | 1,346,461 | ||||||||
| Other payable to Zurich | - | 360,000 | ||||||||
| Short-term promissory notes | - | 1,703,000 | ||||||||
| Dividends payable | - | 677,546 | ||||||||
| Current liabilities held for sale | - | 5,710,807 | ||||||||
| Total current liabilities | 3,484,050 | 15,252,018 | ||||||||
| Loans payable, net of current portion | 94,825 | 44,239 | ||||||||
| Total liabilities | 3,578,875 | 15,296,257 | ||||||||
| Commitments and contingencies | ||||||||||
| Equity (deficit): | ||||||||||
| WPCS equity (deficit): | ||||||||||
| Preferred stock - $0.0001 par value, 5,000,000 shares authorized at April 30, 2016 and April 30, 2015, respectively | ||||||||||
| Convertible Series F, 5,268 shares designated, - 0 and 5,268 shares issued and outstanding at April 30, 2016 and April 30, 2015, respectively | - | 1,589,933 | ||||||||
| Convertible Series F-1, 27,287 shares designated, - 0 and 5,642 shares issued and outstanding at April 30, 2016 and April 30, 2015, respectively | - | 1,702,808 | ||||||||
| Convertible Series G, 2,088 shares designated, - 0 and 2,088 shares issued and outstanding at April 30, 2016 and April 30, 2015, respectively | - | 731,706 | ||||||||
| Convertible Series G-1, 4,247 shares designated, - 0 and 3,128 shares issued and outstanding at April 30, 2016 and April 30, 2015, respectively | - | 1,096,250 | ||||||||
| Convertible Series H, 8,500 shares designated, - 2,638 and 0 shares issued and outstanding at April 30, 2016 and April 30, 2015, respectively; liquidation preference of $406,000 | 406,262 | - | ||||||||
| Convertible Series H-1, 9,488 shares designated, - 8,119 and 0 shares issued and outstanding at April 30, 2016 and April 30, 2015, respectively; liquidation preference of $1,348,000 | 699,324 | - | ||||||||
| Common stock - $0.0001 par value, 100,000,000 shares authorized, 2,691,055 and 982,660 shares issued and outstanding as of April 30, 2016 and April 30, 2015, respectively | 269 | 98 | ||||||||
| Additional paid-in capital | 85,940,389 | 70,380,397 | ||||||||
| Accumulated deficit | (84,820,940 | ) | (76,550,894 | ) | ||||||
| Accumulated other comprehensive income on foreign currency translation | - | 349,723 | ||||||||
| Total WPCS equity (deficit) | 2,225,304 | (699,979 | ) | |||||||
| Noncontrolling interest | - | 560,915 | ||||||||
| Total equity (deficit) | 2,225,304 | (139,064 | ) | |||||||
| Total liabilities and equity | $ | 5,804,179 | $ | 15,157,193 | ||||||
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, | |||||||||
| 2016 | 2015 | ||||||||
| Revenue | $ | 14,555,102 | $ | 24,417,686 | |||||
| Costs and expenses: | |||||||||
| Cost of revenue | 11,570,364 | 20,559,427 | |||||||
| Selling, general and administrative expenses | 6,951,637 | 4,867,056 | |||||||
| Depreciation and amortization | 64,738 | 60,207 | |||||||
| 18,586,739 | 25,486,690 | ||||||||
| Operating loss | (4,031,637 | ) | (1,069,004) | ||||||
| Other income (expense): | |||||||||
| Interest expense | (3,196 | ) | (2,838,739) | ||||||
| Inducement expense | - | (5,492,842) | |||||||
| Income from section 16 settlement | 400,000 | 1,401,516 | |||||||
| Gain on forgiveness of other payable to Zurich | - | 883,757 | |||||||
| Other income | 5,284 | 187,209 | |||||||
| Loss from continuing operations before income tax provision | (3,629,549 | ) | (6,928,103) | ||||||
| Income tax provision | 1,706 | 69,679 | |||||||
| Loss from continuing operations | (3,631,255 | ) | (6,997,782) | ||||||
| Discontinued operations: | |||||||||
| Income (loss) from discontinued operations | 27,261 | (2,550,113) | |||||||
| Gain from disposal | 837,720 | 798,896 | |||||||
| Gain from disposal of BTX | - | 19,700 | |||||||
| Loss from disposal of Seattle Operations | - | (374,932) | |||||||
| Income (loss) from discontinued operations, net of tax | 864,981 | (2,106,449) | |||||||
| Consolidated net loss | (2,766,274 | ) | (9,104,231) | ||||||
| Net income (loss) attributable to noncontrolling interest | 16,505 | (284,210) | |||||||
| Net loss attributable to WPCS | (2,782,779 | ) | (8,820,021) | ||||||
| Dividends declared on preferred stock | (4,742,768 | ) | (2,508,518) | ||||||
| Deemed dividend on convertible preferred stock, due to beneficial conversion feature | (744,499 | ) | - | ||||||
| Net loss attributable to WPCS common shareholders | $ | (8,270,046 | ) | $ | (11,328,539) | ||||
| Basic and diluted net loss attributable to WPCS common shareholders: | |||||||||
| Loss from continuing operations | $ | (3.98 | ) | $ | (14.13) | ||||
| Income (loss) from discontinued operations | $ | 0.00 | $ | (3.37) | |||||
| Gain from disposal | $ | 0.37 | $ | 0.66 | |||||
| Basic and diluted net income from discontinued operations | $ | 0.37 | $ | (2.71) | |||||
| Basic and diluted net loss per common share attributable to WPCS | $ | (3.61 | ) | $ | (16.84) | ||||
| Basic and diluted weighted average number of common shares outstanding | 2,290,050 | 672,723 | |||||||
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, | |||||||||
| 2016 | 2015 | ||||||||
| Operating activities: | |||||||||
| Net loss from operations | $ | (3,631,255 | ) | $ | (6,997,782 | ) | |||
| Consolidated net income (loss) from discontinued operations | 864,981 | (2,106,449 | ) | ||||||
| Adjustments to reconcile consolidated net loss to net cash provided by operating activities: | |||||||||
| Depreciation and amortization | 64,738 | 60,207 | |||||||
| Amortization of notes discount | - | 853,417 | |||||||
| Inducement expenses | - | 5,492,842 | |||||||
| Shares based compensation | 2,506,239 | 170,562 | |||||||
| Interest expense related to make-whole amount | - | 1,889,716 | |||||||
| Gain on sale of Pride | - | (798,897 | ) | ||||||
| Gain on sale of China operations | (837,720 | ) | - | ||||||
| Gain on sale of BTX | - | (19,700 | ) | ||||||
| Loss on sale of Seattle Operations | - | 374,932 | |||||||
| Income on section 16 settlement | (400,000 | ) | (1,401,516 | ) | |||||
| Cash received on section 16 settlement | - | 650,000 | |||||||
| Gain on forgiveness of other payable to Zurich | - | (883,757 | ) | ||||||
| Changes in operating assets and liabilities: | |||||||||
| Accounts receivable | 3,608,736 | (1,879,137 | ) | ||||||
| Costs and estimated earnings in excess of billings on uncompleted contracts | 63,224 | 10,914 | |||||||
| Current assets held for sale | (3,853,621 | ) | 928,403 | ||||||
| Prepaid expenses and other current assets | 93,513 | (7,706 | ) | ||||||
| Other assets | (9,778 | ) | 37,392 | ||||||
| Other assets held for sale | (20,523 | ) | 1,085,405 | ||||||
| Income taxes payable | - | (2,366 | ) | ||||||
| Accounts payable and accrued expenses | (3,342,504 | ) | 1,583,312 | ||||||
| Current liabilities held for sale | 2,200,030 | 742,106 | |||||||
| Accrued severance expense | - | (550,205 | ) | ||||||
| Billings in excess of costs and estimated earnings on uncompleted contracts | 11,828 | (102,102 | ) | ||||||
| Net cash used in operating activities | (2,682,112 | ) | (870,409 | ) | |||||
| Investing activities: | |||||||||
| Cash received on sale of Seattle | - | 1,561,000 | |||||||
| Acquisition of property and equipment | (139,552 | ) | (46,912 | ) | |||||
| Addition on acquisition of BTX capitalized software | - | (2,279 | ) | ||||||
| Payment for sale of BTX | - | (59,097 | ) | ||||||
| Proceeds from sale of China operations, net of acquisition cost | 1,325,744 | - | |||||||
| Net cash provided by investing activities | 1,186,192 | 1,452,712 | |||||||
| Financing activities: | |||||||||
| Proceeds from issuance of Series H-1 preferred stock and warrants | 1,575,000 | - | |||||||
| Borrowings under loan payable obligations | 115,753 | - | |||||||
| Repayment under loan payable obligations | (51,106 | ) | (4,043 | ) | |||||
| Repayments under other payable to Zurich | (360,000 | ) | (290,000 | ) | |||||
| Repayments of short term promissory notes | (4,000 | ) | - | ||||||
| Dividends paid on preferred stock | - | (146,520 | ) | ||||||
| Net cash provided by (used in) financing activities | 1,275,647 | (440,563 | ) | ||||||
| Effect of exchange rate changes on cash | 91,510 | 45,550 | |||||||
| Net (decrease) increase in cash and cash equivalents | (128,763 | ) | 187,290 | ||||||
| Cash and cash equivalents, beginning of the year | 2,364,360 | 2,177,070 | |||||||
| Cash and cash equivalents, end of the year | $ | 2,235,597 | $ | 2,364,360 | |||||
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, | |||||||
| 2016 | 2015 | ||||||
| Schedule of non-cash investing and financing activities: | |||||||
| Declaration on preferred dividend payable | $ | 4,742,768 | $ | 2,508,518 | |||
| Conversion of senior secured convertible note and related make-whole amount to Series F-1 preferred stock Series G-1 preferred stock | $ | - | $ | 973,180 | |||
| Conversion of senior secured convertible note and related make-whole amount to Series F preferred stock Series G preferred stock | $ | - | $ | 451,141 | |||
| Conversion of dividends payable related to make-whole amount to common stock | $ | 4,457,356 | $ | 1,622,954 | |||
| Conversion of dividends payable related to Series F-1 preferred stock | $ | 624,977 | $ | 133,532 | |||
| 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 Preferred E to short term promissory note | $ | - | $ | 2,438,000 | |||
| Conversion of Series F and F-1 preferred stock through the issuance of common stock | $ | 3,292,741 | $ | 1,669,915 | |||
| Conversion of Series G and G-1 preferred stock through the issuance of common stock | $ | 1,827,956 | $ | 110,035 | |||
| Conversion of Series H preferred stock through the issuance of common stock | $ | 892,738 | $ | - | |||
| Conversion of Series H-1 preferred stock through the issuance of common stock | $ | 75,000 | $ | - | |||
| Settlement of debt, make-whole interest and other liabilities on sale of BTX | $ | - | $ | 1,962,000 | |||
| Settlement of capitalized software and other assets on sale of BTX | $ | - | $ | 1,883,000 | |||
| Settlement of severance obligation and sale of Pride | $ | - | $ | 970,000 | |||
The accompanying notes are an integral part of these consolidated financial statements.
INVESTOR CONTACT WPCS International Incorporated Mr. David Allen Chief Financial Officer Phone: 707-759-6008 Email: Email Contact
