WPCS Announces Financial Results for Fiscal Year Ended April 30, 2016
Suisun City Operations Remains Profitable
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E-mailSUISUN, CA -- (Marketwired) -- 07/29/16 -- 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, today announced that on July 28, 2016, it filed its Form 10-K, Annual Report for the fiscal year ended April 30, 2016.
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
Source: WPCS International Inc
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