SUISUN, CA--(Marketwired - Mar 16, 2017) - WPCS International Incorporated (
Sebastian Giordano, CEO of WPCS, commented, "For the three and nine months ended January 31, 2017, we incurred an operating loss of $473,000 and $1,632,000, as compared to operating losses of $823,000 and $3,174,000 for the comparable periods in 2016. Meanwhile, our backlog has increased $3,302,000, or 23.8%, to $17,138,000 from $13,836,000 for the same period last year."
Financial Results for the Three Months Ended January 31, 2017
Revenue for the three months ended January 31, 2017 increased $946,000, or 28.5%, to $4,264,000, as compared to $3,318,000 for the same period in 2016. Such increase was due primarily to increases of $734,000 and $212,000 in our Suisun City and Texas Operations, respectively.
WPCS generated a net loss to common shareholders for the three months ended January 31, 2017 of $996,000, as compared to a net loss to common shareholders of $1,233,000 for the same period last year. This quarter's results were comprised of income from: (i) Suisun City Operations of $286,000 and (ii) other income of $20,000, and which were partially offset by: (i) corporate expenses of $470,000; (ii) a loss from our Texas Operations of $289,000; (iii) deemed dividend on convertible preferred stock of $541,000; and (iv) interest expense of $2,000.
Financial Results for the Nine Months Ended January 31, 2017
Revenue for the nine months ended January 31, 2017 increased $922,000, or 7.9%, to $12,528,000, as compared to $11,606,000 for the same period in 2016. Such increase was due primarily to increases in revenues of $881,000 and $41,000 in our Texas and Suisun City Operations, respectively.
WPCS generated a net loss to common shareholders for the nine months ended January 31, 2017 of $878,000, as compared to a net loss of $7,400,000 for the same period last year. This quarter's results were comprised of income from: (i) Suisun City Operations of $832,000; (ii) gain on an arbitration settlements of $1,181,000; and (iii) other income of $143,000, which were partially offset by: (i) a loss from our Texas Operations of $951,000; (ii) corporate expenses of $1,514,000; (iii) deemed dividend on convertible stock of $561,000; (iv) interest expense of $5,000; and (v) an income tax provision of $3,000.
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, 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) | ||||||||||
| January 31, | April 30, | |||||||||
| 2017 | 2016 | |||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 2,340,707 | $ | 2,235,597 | ||||||
| Accounts receivable, net of allowance of $206,000 and $92,000 at January 31, 2017 and April 30, 2016, respectively | 3,662,932 | 2,886,154 | ||||||||
| Costs and estimated earnings in excess of billings on uncompleted contracts | 330,724 | 357,210 | ||||||||
| Prepaid expenses and other current assets | 124,330 | 66,256 | ||||||||
| Total current assets | 6,458,693 | 5,545,217 | ||||||||
| Property and equipment, net | 380,980 | 237,800 | ||||||||
| Other assets | 14,305 | 21,162 | ||||||||
| Total assets | $ | 6,853,978 | $ | 5,804,179 | ||||||
| LIABILITIES AND EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Current portion of loans payable | $ | 62,588 | $ | 53,996 | ||||||
| Accounts payable and accrued expenses | 1,810,015 | 2,071,765 | ||||||||
| Billings in excess of costs and estimated earnings on uncompleted contracts | 2,481,122 | 1,358,289 | ||||||||
| Total current liabilities | 4,353,725 | 3,484,050 | ||||||||
| Loans payable, net of current portion | 139,564 | 94,825 | ||||||||
| Total liabilities | 4,493,289 | 3,578,875 | ||||||||
| Commitments and contingencies | ||||||||||
| Stockholders' equity | ||||||||||
| Preferred stock - $0.0001 par value, 5,000,000 shares authorized at January 31, 2017 and April 30, 2016, respectively | ||||||||||
| Convertible Series H, 8,500 shares designated - 8 and 2,638 shares issued and outstanding at January 31, 2017 and April 30, 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 January 31, 2017 and April 30, 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 January 31, 2017 and April 30, 2016, respectively; liquidation preference of $400,000 | 230,721 | - | ||||||||
| Common stock - $0.0001 par value, 100,000,000 shares authorized, 3,352,159 and 2,691,055 shares issued and outstanding as of January 31, 2017 and April 30, 2016, respectively | 335 | 269 | ||||||||
| Additional paid-in capital | 87,389,538 | 85,940,389 | ||||||||
| Accumulated deficit | (85,698,677 | ) | (84,820,940 | ) | ||||||
| Total stockholders' equity | 2,360,689 | 2,225,304 | ||||||||
| Total liabilities and equity | $ | 6,853,978 | $ | 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 | For the nine months ended | ||||||||||||||||
| January 31, | January 31, | ||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||||
| Revenue | $ | 4,263,709 | $ | 3,317,636 | $ | 12,527,872 | $ | 11,605,880 | |||||||||
| Costs and expenses: | |||||||||||||||||
| Cost of revenue | 3,235,871 | 2,521,627 | 9,690,566 | 9,263,395 | |||||||||||||
| Selling, general and administrative expenses | 1,465,550 | 1,602,751 | 4,385,862 | 5,470,760 | |||||||||||||
| Depreciation and amortization | 35,219 | 16,075 | 83,914 | 45,537 | |||||||||||||
| 4,736,640 | 4,140,453 | 14,160,342 | 14,779,692 | ||||||||||||||
| Operating loss | (472,931 | ) | (822,817 | ) | (1,632,470 | ) | (3,173,812 | ) | |||||||||
| Other income (expense): | |||||||||||||||||
| Interest expense | (2,430 | ) | (523 | ) | (5,440 | ) | (2,021 | ) | |||||||||
| Income from Section 16 settlement | - | - | - | 400,000 | |||||||||||||
| Income from arbitration settlement | - | - | 1,180,902 | - | |||||||||||||
| Other income | 20,394 | 4,871 | 142,828 | 1,965 | |||||||||||||
| Loss from continuing operations before income tax provision | (454,967 | ) | (818,469 | ) | (314,180 | ) | (2,773,868 | ) | |||||||||
| Income tax provision | - | 607 | 2,567 | 1,706 | |||||||||||||
| Loss from continuing operations | (454,967 | ) | (819,076 | ) | (316,747 | ) | (2,775,574 | ) | |||||||||
| Discontinued operations: | |||||||||||||||||
| Income from discontinued operations | - | - | - | 41,261 | |||||||||||||
| Gain from disposal | - | - | - | 837,720 | |||||||||||||
| Consolidated net income (loss) | (454,967 | ) | (819,076 | ) | (316,747 | ) | (1,896,593 | ) | |||||||||
| Net income attributable to noncontrolling interest | - | - | - | 16,505 | |||||||||||||
| Net loss attributable to WPCS | (454,967 | ) | (819,076 | ) | (316,747 | ) | (1,913,098 | ) | |||||||||
| Dividends declared on preferred stock | - | (372,810 | ) | - | (4,742,768 | ) | |||||||||||
| Deemed dividend on convertible preferred stock, due to beneficial conversion feature | (541,266 | ) | (40,729 | ) | (560,990 | ) | (744,499 | ) | |||||||||
| Net loss attributable to WPCS common shareholders | $ | (996,233 | ) | $ | (1,232,615 | ) | $ | (877,737 | ) | $ | (7,400,365 | ) | |||||
| Basic and diluted loss from continuing operations per common share | $ | (0.33 | ) | $ | (0.47 | ) | $ | (0.31 | ) | $ | (3.82 | ) | |||||
| Basic and diluted income from discontinued operations per common share | - | - | - | 0.01 | |||||||||||||
| Basic and diluted net loss per common share | $ | (0.33 | ) | $ | (0.47 | ) | $ | (0.31 | ) | $ | (3.81 | ) | |||||
| Basic and diluted weighted average number of common shares outstanding | 2,976,670 | 2,597,952 | 2,844,101 | 2,161,104 | |||||||||||||
| 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 nine months ended | |||||||||
| January 31, | |||||||||
| 2017 | 2016 | ||||||||
| Operating activities: | |||||||||
| Net loss from operations | $ | (316,747 | ) | $ | (2,775,574 | ) | |||
| Consolidated net income from discontinued operations | - | 878,981 | |||||||
| Adjustments to reconcile consolidated net loss to net cash used in operating activities: | |||||||||
| Depreciation and amortization | 83,914 | 45,537 | |||||||
| Shares based compensation | 22,501 | 2,219,068 | |||||||
| Gain on sale of China operations | - | (837,720 | ) | ||||||
| Income on Section 16 settlement | - | (400,000 | ) | ||||||
| Changes in operating assets and liabilities: | |||||||||
| Accounts receivable | (776,778 | ) | 2,725,507 | ||||||
| Costs and estimated earnings in excess of billings on uncompleted contracts | 26,486 | 4,387 | |||||||
| Current assets held for sale | - | (3,853,621 | ) | ||||||
| Prepaid expenses and other current assets | (58,074 | ) | 66,211 | ||||||
| Other assets | 6,857 | (2,110 | ) | ||||||
| Other assets held for sale | - | (34,523 | ) | ||||||
| Accounts payable and accrued expenses | (261,750 | ) | (3,149,544 | ) | |||||
| Current liabilities held for sale | - | 2,200,030 | |||||||
| Billings in excess of costs and estimated earnings on uncompleted contracts | 1,122,833 | 374,840 | |||||||
| Net cash used in operating activities | (150,758 | ) | (2,538,531 | ) | |||||
| Investing activities: | |||||||||
| Acquisition of property and equipment | (104,069 | ) | (109,851 | ) | |||||
| Proceeds from sale of China operations, net of acquisition cost | - | 1,325,744 | |||||||
| Net cash (used in) provided by investing activities | (104,069 | ) | 1,215,893 | ||||||
| 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 | 429,631 | - | |||||||
| Borrowings under loan payable obligations | - | 99,369 | |||||||
| Repayment under loan payable obligations | (69,694 | ) | (35,304 | ) | |||||
| Repayments under other payable to Zurich | - | (360,000 | ) | ||||||
| Repayments of short term convertible note | - | (4,000 | ) | ||||||
| Net cash provided by financing activities | 359,937 | 1,275,065 | |||||||
| Effect of exchange rate changes on cash | - | 91,510 | |||||||
| Net increase in cash and cash equivalents | 105,110 | 43,937 | |||||||
| Cash and cash equivalents, beginning of the period | 2,235,597 | 2,364,360 | |||||||
| Cash and cash equivalents, end of the period | $ | 2,340,707 | $ | 2,408,297 | |||||
| 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 nine months ended | |||||||
| January 31, | |||||||
| 2017 | 2016 | ||||||
| Schedule of non-cash investing and financing activities: | |||||||
| Automobile financing | $ | 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 | $ | - | |||
| 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 | $ | 892,680 | |||
| 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 condensed consolidated financial statements. |
COMPANY CONTACT Mr. David Allen Chief Financial Officer WPCS International Incorporated Phone: 707.759.6008 Email: Email Contact
