SUISUN, CA--(Marketwired - Sep 13, 2016) - WPCS International Incorporated (
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.
INVESTOR CONTACT WPCS International Incorporated Mr. David Allen Chief Financial Officer Phone: 707-759-6008 Email: Email Contact
