SUISUN, CA--(Marketwired - Sep 17, 2015) - WPCS International Incorporated (
Sebastian Giordano, Interim CEO of WPCS, commented, "We are extremely pleased to report that the Company had income from continuing operations of $84,000 for the three months ended July 31, 2015, as our Suisun Operations generated net income of $542,000 in the first quarter."
Financial Results for the Three Months Ended July 31, 2015
Revenue for the three months ended July 31, 2015 decreased $1,600,000, or 27.0%, to $4,464,000 as compared to $6,064,000 for the same period in 2014.
The Company's $84,000 income from continuing operations for the three months ended July 31, 2015 was due primarily to an operating loss of $311,000 as well as interest, taxes and other expenses totaling $5,000, which were offset by noncash income from Section 16 settlements of $400,000. This compared to a net operating loss from continuing operations of $2,647,500 for the same period in 2014.
WPCS has recorded the financial results for our divested subsidiaries as discontinued operations. For the three months ended July 31, 2015, WPCS recorded income from discontinued operations of approximately $41,000. Net loss attributable to common shareholders for the three-month period totaled $4,182,000 due primarily from dividends declared and deemed on preferred stock.
"As one multi-year, high revenue, but lower margin project neared completion, we expected topline revenues to be lower this quarter than the same period last year. However, Suisun's profitability this quarter was significantly bolstered by a robust 22.8% gross profit margin due to more lower revenue, higher margin jobs," Giordano concluded.
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, | ||||||||
2015 | 2015 | ||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 5,539,610 | $ | 2,364,360 | |||||
Accounts receivable, net of allowance of $92,000 at July 31, 2015 and April 30, 2015, respectively | 5,069,955 | 6,494,890 | |||||||
Costs and estimated earnings in excess of billings on uncompleted contracts | 523,758 | 420,434 | |||||||
Prepaid expenses and other current assets | 75,305 | 159,769 | |||||||
Current assets held for sale | 5,037,959 | 4,566,251 | |||||||
Total current assets | 16,246,587 | 14,005,704 | |||||||
Property and equipment, net | 158,724 | 162,986 | |||||||
Other assets | 11,384 | 11,384 | |||||||
Other assets held for sale | 978,211 | 977,119 | |||||||
Total assets | $ | 17,394,906 | $ | 15,157,193 | |||||
LIABILITIES AND EQUITY | |||||||||
Current liabilities: | |||||||||
Current portion of loans payable | $ | 43,905 | $ | 39,935 | |||||
Accounts payable and accrued expenses | 4,131,620 | 5,409,361 | |||||||
Billings in excess of costs and estimated earnings on uncompleted contracts | 1,471,816 | 1,346,461 | |||||||
Other payable to Zurich | 225,000 | 360,000 | |||||||
Short-term promissory notes | - | 1,703,000 | |||||||
Income taxes payable | 2,250 | 4,908 | |||||||
Dividends payable | 228,568 | 677,546 | |||||||
Current liabilities held for sale | 7,935,488 | 5,710,807 | |||||||
Total current liabilities | 14,038,647 | 15,252,018 | |||||||
Loans payable, net of current portion | 48,031 | 44,239 | |||||||
Total liabilities | 14,086,678 | 15,296,257 | |||||||
Commitments and contingencies | |||||||||
Equity (deficit): | |||||||||
WPCS equity (deficit): | |||||||||
Preferred stock - $0.0001 par value, 5,000,000 shares authorized at July 31, 2015 and April 30, 2015, respectively | |||||||||
Convertible Series F - 0 and 5,268 shares issued and outstanding at July 31, 2015 and April 30, 2015, respectively; liquidation preference of $0 | - | 1,589,933 | |||||||
Convertible Series F-1 - 1,858 and 5,642 shares issued and outstanding at July 31, 2015 and April 30, 2015, respectively; liquidation preference of $3,089,348 | 560,757 | 1,702,808 | |||||||
Convertible Series G - 0 and 2,088 shares issued and outstanding at July 31, 2015 and April 30, 2015, respectively; liquidation preference of $0 | - | 731,706 | |||||||
Convertible Series G-1 - 2,122 and 3,128 shares issued and outstanding at July 31, 2015 and April 30, 2015, respectively; liquidation preference of $4,329,212 | 743,726 | 1,096,250 | |||||||
Convertible Series H - 3,943 and 0 shares issued and outstanding at July 31, 2015 and April 30, 2015, respectively; liquidation preference of $607,232 | 607,232 | - | |||||||
Convertible Series H-1 - 8,532 and 0 shares issued and outstanding at July 31, 2015 and April 30, 2015, respectively; liquidation preference of $1,415,030 | 733,595 | - | |||||||
Common stock - $0.0001 par value, 100,000,000 shares authorized, 2,200,649 and 982,660 shares issued and outstanding as of July 31, 2015 and April 30, 2015, respectively | 220 | 98 | |||||||
Additional paid-in capital | 80,469,531 | 70,380,397 | |||||||
Accumulated deficit | (80,732,898 | ) | (76,550,894 | ) | |||||
Accumulated other comprehensive income on foreign currency translation | 349,076 | 349,723 | |||||||
Total WPCS equity (deficit) | 2,731,239 | (699,979 | ) | ||||||
Noncontrolling interest | 576,989 | 560,915 | |||||||
Total equity (deficit) | 3,308,228 | (139,064 | ) | ||||||
Total liabilities and equity | $ | 17,394,906 | $ | 15,157,193 |
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, | |||||||||
2015 | 2014 | ||||||||
Revenue | $ | 4,464,003 | $ | 6,064,457 | |||||
Costs and expenses: | |||||||||
Cost of revenue | 3,447,203 | 4,780,419 | |||||||
Selling, general and administrative expenses | 1,312,803 | 1,045,010 | |||||||
Depreciation and amortization | 14,969 | 16,183 | |||||||
4,774,975 | 5,841,612 | ||||||||
Operating (loss) income | (310,972 | ) | 222,845 | ||||||
Other income (expense): | |||||||||
Interest expense | (892 | ) | (2,835,482 | ) | |||||
Income from Section 16 settlement | 400,000 | - | |||||||
Other expenses | (2,906 | ) | (7,500 | ) | |||||
Income (loss) from continuing operations before income tax provision | 85,230 | (2,620,137 | ) | ||||||
Income tax provision | 1,099 | 27,363 | |||||||
Income (loss) from continuing operations | 84,131 | (2,647,500 | ) | ||||||
Discontinued operations: | |||||||||
Income (loss) from discontinued operations | 41,261 | (438,114 | ) | ||||||
Gain from disposal | - | 798,896 | |||||||
Income from discontinued operations, net of tax | 41,261 | 360,782 | |||||||
Consolidated net income (loss) | 125,392 | (2,286,718 | ) | ||||||
Net income (loss) attributable to noncontrolling interest | 16,505 | (49,020 | ) | ||||||
Net income (loss) attributable to WPCS | 108,887 | (2,237,698 | ) | ||||||
Dividends declared on preferred stock | (3,587,121 | ) | (74,487 | ) | |||||
Deemed dividend on convertible preferred stock, due to beneficial conversion feature | (703,770 | ) | - | ||||||
Net loss attributable to WPCS common shareholders | $ | (4,182,004 | ) | $ | (2,312,185 | ) | |||
Basic and diluted net loss attributable to WPCS common shareholders: | |||||||||
Loss from continuing operations | $ | (2.86 | ) | $ | (4.30 | ) | |||
Income (loss) from discontinued operations | $ | 0.02 | $ | (0.62 | ) | ||||
Gain from disposal | $ | - | $ | 1.26 | |||||
Basic and diluted net income from discontinued operations | $ | 0.02 | $ | 0.64 | |||||
Basic and diluted net loss per common share attributable to WPCS | $ | (2.84 | ) | $ | (3.66 | ) | |||
Basic and diluted weighted average number of common shares outstanding | 1,470,248 | 632,417 |
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, | ||||||||
2015 | 2014 | |||||||
Operating activities: | ||||||||
Net income (loss) from operations | $ | 84,131 | $ | (2,647,500 | ) | |||
Consolidated net income from discontinued operations | 41,261 | 360,782 | ||||||
Adjustments to reconcile consolidated net loss to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 14,969 | 16,183 | ||||||
Amortization of notes discount | - | 853,417 | ||||||
Interest expense related to make-whole amount | - | 1,889,716 | ||||||
Gain on sale of Pride | - | (798,896 | ) | |||||
Income on Section 16 settlement | (400,000 | ) | - | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 1,424,935 | (1,577,117 | ) | |||||
Costs and estimated earnings in excess of billings on uncompleted contracts | (103,324 | ) | (169,500 | ) | ||||
Deferred contract costs | - | 929 | ||||||
Current assets held for sale | (506,215 | ) | 1,188,498 | |||||
Prepaid expenses and other current assets | 84,464 | (84,620 | ) | |||||
Other assets | - | 18,150 | ||||||
Other assets held for sale | (34,522 | ) | 179,591 | |||||
Income taxes payable | (2,658 | ) | (2,200 | ) | ||||
Accounts payable and accrued expenses | (1,277,741 | ) | 2,082,017 | |||||
Current liabilities held for sale | 2,200,030 | (559,652 | ) | |||||
Accrued severance expense | - | (1,218,750 | ) | |||||
Billings in excess of costs and estimated earnings on uncompleted contracts | 125,355 | (182,441 | ) | |||||
Net cash provided by (used in) operating activities | 1,650,685 | (651,393 | ) | |||||
Investing activities: | ||||||||
Acquisition of property and equipment | (10,707 | ) | (137,314 | ) | ||||
Net cash used in investing activities | (10,707 | ) | (137,314 | ) | ||||
Financing activities: | ||||||||
Proceeds from issuance of Series H-1 preferred stock and warrants | 1,575,000 | - | ||||||
Borrowings under loan payable obligations | 7,762 | 10,559 | ||||||
Repayments under other payable to Zurich | (135,000 | ) | - | |||||
Repayments of short term convertible note | (4,000 | ) | - | |||||
Dividends paid on preferred stock | - | (72,034 | ) | |||||
Net cash provided by (used in) financing activities | 1,443,762 | (61,475 | ) | |||||
Effect of exchange rate changes on cash | 91,510 | (7,939 | ) | |||||
Net increase (decrease) in cash and cash equivalents | 3,175,250 | (858,121 | ) | |||||
Cash and cash equivalents, beginning of the quarter | 2,364,360 | 2,177,070 | ||||||
Cash and cash equivalents, end of the quarter | $ | 5,539,610 | $ | 1,318,949 |
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, | ||||||
2015 | 2014 | |||||
Schedule of non-cash investing and financing activities: | ||||||
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 promissory notes 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 | $ | - | ||
Settlement of severance obligation and sale of Pride | $ | - | $ | 970,000 | ||
Declaration on preferred dividends payable | $ | - | $ | 74,487 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
Contact Information:
INVESTOR CONTACT:
WPCS International Incorporated
David Allen
Chief Financial Officer
Phone: 707-759-6008
Email: