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 announced that today it filed
its Quarterly Report on Form 10-Q, for the three and six months
ended October 31, 2017.
Sebastian Giordano, CEO of WPCS, commented,
"While we continue working towards completing the proposed merger
with DropCar, Inc., we are pleased to report that for the three and
six months ended October 31, 2017, our Suisun City Operations
generated net income of $158,000 and $343,000, respectively."
Financial Results for the Three Months Ended October 31,
2017
Revenue for the three months ended October 31,
2017 decreased $988,000, or 20%, to $3,860,000, as compared to
$4,848,000 for same prior year period due to revenue decreases of:
(i) $583,000 in our Suisun City Operations and (ii) $405,000 from
our Texas Operations, which will not generate any further revenues
as it was closed in the fourth quarter of fiscal year 2017.
The Company had a net loss from operations of $457,000 for the
three months ended October 31, 2017 due primarily to an operating
loss of $490,000 and interest expense of $2,000, which were
partially offset by income of $8,000 from a legal settlement and
other income of $27,000. This compared to a net loss from
operations of $419,000 for the same prior year period. The
Company had a net loss attributable to WPCS common shareholders of
$1,271,000 for the three months ended October 31, 2017 as compared
to a net loss attributable to WPCS common shareholders of $439,000
for the same prior year period.
Financial Results for the Six Months Ended October 31,
2017
Revenue for the six months ended October 31,
2017 decreased $881,000, or 10.7%, to $7,383,000, as compared to
approximately $8,264,000 for same prior year period due to revenue
decreases of: (i) $203,000 in our Suisun City Operations and (ii)
$678,000 from our Texas Operations, which will not generate any
further revenues as it was closed in the fourth quarter of fiscal
year 2017.
The Company had a net loss from operations of $897,000 for the
six months ended October 31, 2017 due primarily to an operating
loss of $936,000 and interest expense of $4,000, which were
partially offset by income of $16,000 from a legal settlement and
other income of $27,000. This compared to a net loss from
operations of $1,160,000 for the same prior year period. The
Company had a net loss attributable to WPCS common shareholders of
$1,711,000 for the six months ended October 31, 2017 as compared to
net income attributable to WPCS common shareholders of $118,000 for
the same prior year period, primarily due to income from legal
settlements of $1,180,000.
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.
On September 6, 2017, WPCS announced the signing
of a definitive merger agreement with DropCar,
a privately-held company that provides app-based automotive
logistics and concierge services for both consumers and the
automotive industry. For more information about DropCar, please
visit www.dropcar.com. For more information about the proposed
merger, please see WPCS’s Current Report on Form 8-K filed with the
Securities and Exchange Commission on September 6, 2017 and the
Company’s Registration Statement on Form S-4 (SEC File #
333-220891).
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, other future conditions and the risk factors detailed from
time to time in the Company’s periodic filings with the Securities
and Exchange Commission, including without limitation, the
Company’s Annual Report on Form 10-K for the year ended April 30,
2017. 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
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(UNAUDITED) |
|
|
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|
|
|
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|
|
|
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|
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October 31, |
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April 30, |
|
|
|
2017 |
|
|
2017 |
|
ASSETS |
|
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|
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|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
3,195,086 |
|
|
$ |
1,659,318 |
|
Restricted cash |
|
|
500,176 |
|
|
|
500,026 |
|
Accounts
receivable, net of allowance of $247,000 at October 31, 2017 and
April 30, 2017, respectively |
|
|
2,922,031 |
|
|
|
4,199,674 |
|
Costs and
estimated earnings in excess of billings on uncompleted
contracts |
|
|
315,437 |
|
|
|
410,826 |
|
Prepaid
expenses and other current assets |
|
|
41,555 |
|
|
|
41,135 |
|
Total
current assets |
|
|
6,974,285 |
|
|
|
6,810,979 |
|
|
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
|
389,668 |
|
|
|
322,643 |
|
|
|
|
|
|
|
|
|
|
Other assets |
|
|
11,484 |
|
|
|
11,484 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
7,375,437 |
|
|
$ |
7,145,106 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
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Current
liabilities: |
|
|
|
|
|
|
|
|
Current
portion of loans payable |
|
$ |
51,590 |
|
|
$ |
52,946 |
|
Accounts
payable and accrued expenses |
|
|
1,732,411 |
|
|
|
1,790,256 |
|
Billings
in excess of costs and estimated earnings on uncompleted
contracts |
|
|
2,247,174 |
|
|
|
2,105,797 |
|
Total
current liabilities |
|
|
4,031,175 |
|
|
|
3,948,999 |
|
|
|
|
|
|
|
|
|
|
Loans payable, net of
current portion |
|
|
99,702 |
|
|
|
124,559 |
|
Total liabilities |
|
|
4,130,877 |
|
|
|
4,073,558 |
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
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|
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|
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Stockholders'
equity |
|
|
|
|
|
|
|
|
Preferred
stock - $0.0001 par value, 5,000,000 shares authorized at October
31, 2017 and April 30, 2017, respectively |
|
|
|
|
|
|
|
|
Convertible Series H, 8,500 shares designated - 8 shares issued and
outstanding at October 31, 2017 and April 30, 2017, respectively;
liquidation preference of $1,000 |
|
|
1,242 |
|
|
|
1,242 |
|
Convertible Series H-1, 9,488 shares designated - 0 and 4,289
shares issued and outstanding at October 31, 2017 and April 30,
2017, respectively; liquidation preference of $0 |
|
|
- |
|
|
|
437,530 |
|
Convertible Series H-2, 3,500 shares designated - 2,066 and 3,305
shares issued and outstanding at October 31, 2017 and April 30,
2017, respectively; liquidation preference of $250,000 |
|
|
167,494 |
|
|
|
230,721 |
|
Convertible Series H-3, 9,500 shares designated - 3,189 and 7,017
shares issued and outstanding at October 31, 2017 and April 30,
2017, respectively; liquidation preference of $440,000 |
|
|
251,233 |
|
|
|
475,185 |
|
Common
stock - $0.0001 par value, 100,000,000 shares authorized, 5,090,224
and 3,352,159 shares issued and outstanding as of October 31, 2017
and April 30, 2017, respectively |
|
|
508 |
|
|
|
335 |
|
Additional paid-in capital |
|
|
91,612,396 |
|
|
|
89,003,669 |
|
Accumulated deficit |
|
|
(88,788,313 |
) |
|
|
(87,077,134 |
) |
Total stockholders'
equity |
|
|
3,244,560 |
|
|
|
3,071,548 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and
equity |
|
$ |
7,375,437 |
|
|
$ |
7,145,106 |
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of
these condensed consolidated financial statements
WPCS INTERNATIONAL INCORPORATED AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(UNAUDITED) |
|
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|
For the three months ended |
|
|
For the six months ended |
|
|
|
October 31, |
|
|
October 31, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
3,859,617 |
|
|
$ |
4,847,710 |
|
|
$ |
7,382,964 |
|
|
$ |
8,264,163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue |
|
|
3,061,372 |
|
|
|
3,819,187 |
|
|
|
5,815,922 |
|
|
|
6,454,695 |
|
Selling,
general and administrative expenses |
|
|
1,249,147 |
|
|
|
1,567,326 |
|
|
|
2,433,648 |
|
|
|
2,920,312 |
|
Depreciation and amortization |
|
|
38,844 |
|
|
|
28,029 |
|
|
|
68,917 |
|
|
|
48,695 |
|
|
|
|
4,349,363 |
|
|
|
5,414,542 |
|
|
|
8,318,487 |
|
|
|
9,423,702 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
(489,746 |
) |
|
|
(566,832 |
) |
|
|
(935,523 |
) |
|
|
(1,159,539 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
|
(1,581 |
) |
|
|
(1,029 |
) |
|
|
(3,632 |
) |
|
|
(3,010 |
) |
Income
from legal settlement |
|
|
7,750 |
|
|
|
30,902 |
|
|
|
15,500 |
|
|
|
1,180,902 |
|
Other
income |
|
|
27,471 |
|
|
|
117,947 |
|
|
|
27,471 |
|
|
|
122,434 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from
operations before income tax provision |
|
|
(456,106 |
) |
|
|
(419,012 |
) |
|
|
(896,184 |
) |
|
|
140,787 |
|
Income tax
provision |
|
|
1,020 |
|
|
|
(51 |
) |
|
|
1,020 |
|
|
|
2,567 |
|
(Loss) income from
operations |
|
|
(457,126 |
) |
|
|
(418,961 |
) |
|
|
(897,204 |
) |
|
|
138,220 |
|
Net (loss) income |
|
|
(457,126 |
) |
|
|
(418,961 |
) |
|
|
(897,204 |
) |
|
|
138,220 |
|
Deemed dividend on
convertible preferred stock, due to beneficial conversion
feature |
|
|
(813,975 |
) |
|
|
(19,724 |
) |
|
|
(813,975 |
) |
|
|
(19,724 |
) |
Net (loss) income
attributable to WPCS common stockholders |
|
$ |
(1,271,101 |
) |
|
$ |
(438,685 |
) |
|
$ |
(1,711,179 |
) |
|
$ |
118,496 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) income per
common share |
|
$ |
(0.34 |
) |
|
$ |
(0.15 |
) |
|
$ |
(0.48 |
) |
|
$ |
0.04 |
|
Diluted (loss) income
per common share |
|
$ |
(0.34 |
) |
|
$ |
(0.15 |
) |
|
$ |
(0.48 |
) |
|
$ |
0.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding – basic |
|
|
3,748,861 |
|
|
|
2,854,230 |
|
|
|
3,550,510 |
|
|
|
2,777,817 |
|
Weighted average shares
outstanding – diluted |
|
|
3,748,861 |
|
|
|
2,854,230 |
|
|
|
3,550,510 |
|
|
|
3,790,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of
these condensed consolidated financial statements.
WPCS INTERNATIONAL INCORPORATED AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS(UNAUDITED) |
|
|
|
|
|
|
|
For the six months ended |
|
|
|
October 31, |
|
|
|
2017 |
|
|
2016 |
|
Operating
activities: |
|
|
|
|
|
|
|
|
Net
(loss) income |
|
$ |
(897,204 |
) |
|
$ |
138,220 |
|
Adjustments to
reconcile consolidated net loss to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
68,917 |
|
|
|
48,695 |
|
Shares
based compensation |
|
|
- |
|
|
|
22,501 |
|
Changes
in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts
receivable |
|
|
1,277,643 |
|
|
|
(324,990 |
) |
Costs and
estimated earnings in excess of billings on uncompleted
contracts |
|
|
95,389 |
|
|
|
(372,408 |
) |
Prepaid
expenses and other current assets |
|
|
(420 |
) |
|
|
(46,908 |
) |
Other
assets |
|
|
- |
|
|
|
1,999 |
|
Accounts
payable and accrued expenses |
|
|
(57,845 |
) |
|
|
143,477 |
|
Billings
in excess of costs and estimated earnings on uncompleted
contracts |
|
|
141,377 |
|
|
|
372,707 |
|
Net cash provided by
(used in) operating activities |
|
|
627,857 |
|
|
|
(16,707 |
) |
|
|
|
|
|
|
|
|
|
Investing
activities: |
|
|
|
|
|
|
|
|
Acquisition of property and equipment |
|
|
(135,942 |
) |
|
|
(96,475 |
) |
Net cash used in
investing activities |
|
|
(135,942 |
) |
|
|
(96,475 |
) |
|
|
|
|
|
|
|
|
|
Financing
activities: |
|
|
|
|
|
|
|
|
Warrants
exercised for cash |
|
|
1,070,216 |
|
|
|
- |
|
Repayment
under loan payable obligations |
|
|
(26,213 |
) |
|
|
(52,027 |
) |
Net cash provided by
(used in) financing activities |
|
|
1,044,003 |
|
|
|
(52,027 |
) |
|
|
|
|
|
|
|
|
|
Net increase (decrease)
in cash, cash equivalents and restricted cash |
|
|
1,535,918 |
|
|
|
(165,209 |
) |
Cash, cash equivalents
and restricted cash beginning of the year |
|
|
2,159,344 |
|
|
|
2,235,597 |
|
Cash, cash equivalents
and restricted cash end of the year |
|
$ |
3,695,262 |
|
|
$ |
2,070,388 |
|
|
|
|
|
|
|
|
|
|
WPCS INTERNATIONAL INCORPORATED AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS(UNAUDITED) |
|
|
|
|
|
|
|
For the six months ended |
|
|
|
October 31, |
|
|
|
2017 |
|
|
2016 |
|
Schedule of non-cash
investing and financing activities: |
|
|
|
|
|
|
|
|
Automobile financing |
|
$ |
- |
|
|
$ |
72,650 |
|
Conversion of Series H preferred stock through the issuance of
common stock |
|
$ |
- |
|
|
$ |
219,450 |
|
Conversion of Series H-1 preferred stock to common stock |
|
$ |
860,501 |
|
|
$ |
36,920 |
|
Deemed
dividend on conversion of Series H-1 convertible preferred stock to
common stock |
|
$ |
422,971 |
|
|
$ |
19,724 |
|
Conversion of Series H-2 preferred stock to common stock |
|
$ |
149,919 |
|
|
$ |
- |
|
Deemed
dividend on conversion of Series H-2 convertible preferred stock to
common stock |
|
$ |
86,692 |
|
|
$ |
- |
|
Conversion of Series H-3 preferred stock to common stock |
|
$ |
528,264 |
|
|
$ |
- |
|
Deemed
dividend on conversion of Series H-3 convertible preferred stock to
common stock |
|
$ |
304,312 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of
these condensed consolidated financial statements.
INVESTOR RELATIONS CONTACT
Investor Relations Department
917.909.6330
IR@wpcs.com
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