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WPCS Announces Financial Results for Fiscal 2018 First Quarter

Suisun City Operations Continue Profitability

WPCS Announces Financial Results for 
Fiscal 2018 First QuarterWPCS Announces Financial Results for Fiscal 2018 First Quarter Click here for high-resolution version

/EINPresswire.com/ -- SUISUN, CA--(Marketwired - Sep 13, 2017) - 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 September 12, 2017, it filed its Quarterly Report on Form 10-Q, for the three months ended July 31, 2017.

Sebastian Giordano, CEO of WPCS, commented, "We are pleased to report that for the three months ended July 31, 2017 our Suisun City Operations generated net income of $184,000."

Financial Results for the Three Months Ended July 31, 2017

Revenue for the three months ended July 31, 2017 increased $107,000, or 3.1%, to $3,523,000, as compared to $3,416,000 for same prior year period due to an approximately $380,000 increase in revenue in Suisun City Operations offset by an approximately $273,000 decrease in revenue from our Texas Operations. We do not anticipate any further revenues from the Texas Operations since it was closed in the fourth quarter of fiscal year 2017.

The Company had a net loss from operations of $440,000 for the three months ended July 31, 2017 due primarily to an operating loss of $446,000 as well as interest expense of $2,000, which were partially offset by income of $8,000 from a legal settlement. This compared to net income from operations of $557,000 for the same prior year period, which was primarily due to the receipt of proceeds from a one-time legal settlement of $1,150,000.

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, Inc. ("DropCar") a privately-held company that provides app-based automotive logistics and concierge services for both consumers and the automotive industry. Please see WPCS's Current Report on Form 8-K filed with the Securities and Exchange Commission on September 6, 2017 for more information on the proposed merger.

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 SUBSIDIARIES
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
 
  July 31,     April 30,  
  2017     2017  
ASSETS              
Current assets:              
  Cash and cash equivalents $ 1,880,549     $ 1,659,318  
  Restricted cash   500,100       500,026  
  Accounts receivable, net of allowance of $247,000 at July 31, 2017 and April 30, 2017, respectively   4,002,248       4,199,674  
  Costs and estimated earnings in excess of billings on uncompleted contracts   334,956       410,826  
  Prepaid expenses and other current assets   50,899       41,135  
    Total current assets   6,768,752       6,810,979  
               
Property and equipment, net   296,675       322,643  
               
Other assets   11,484       11,484  
               
Total assets $ 7,076,911     $ 7,145,106  
               
LIABILITIES AND EQUITY              
Current liabilities:              
  Current portion of loans payable $ 52,271     $ 52,946  
  Accounts payable and accrued expenses   1,369,097       1,790,256  
  Billings in excess of costs and estimated earnings on uncompleted contracts   2,911,882       2,105,797  
    Total current liabilities   4,333,250       3,948,999  
               
Loans payable, net of current portion   112,191       124,559  
Total liabilities   4,445,441       4,073,558  
               
Commitments and contingencies              
               
Stockholders' equity              
  Preferred stock - $0.0001 par value, 5,000,000 shares authorized at July 31, 2017 and April 30, 2017, respectively              
    Convertible Series H, 8,500 shares designated- 8 shares issued and outstanding at July 31, 2017 and April 30, 2017, respectively; liquidation preference of $1,000   1,242       1,242  
    Convertible Series H-1, 9,488 shares designated - 4,289 shares issued and outstanding at July 31, 2017 and April 30, 2017, respectively; liquidation preference of $712,000   437,530       437,530  
    Convertible Series H-2, 3,500 shares designated - 3,305 shares issued and outstanding at July 31, 2017 and April 30, 2017, respectively; liquidation preference of $400,000   230,721       230,721  
    Convertible Series H-3, 9,500 shares designated - 7,017 shares issued and outstanding at July 31, 2017 and April 30, 2017, respectively; liquidation preference of $968,000   475,185       475,185  
  Common stock - $0.0001 par value, 100,000,000 shares authorized, 3,352,159 shares issued and outstanding as of July 31, 2017 and April 30, 2017, respectively   335       335  
  Additional paid-in capital   89,003,669       89,003,669  
  Accumulated deficit   (87,517,212 )     (87,077,134 )
Total stockholders' equity   2,631,470       3,071,548  
               
Total liabilities and equity $ 7,076,911     $ 7,145,106  
               
               

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,  
  2017     2016  
           
Revenue $ 3,523,347     $ 3,416,453  
               
Costs and expenses:              
  Cost of revenue   2,754,550       2,635,508  
  Selling, general and administrative expenses   1,184,501       1,352,986  
  Depreciation and amortization   30,073       20,666  
    3,969,124       4,009,160  
               
Operating loss   (445,777 )     (592,707 )
               
Other income (expense):              
  Interest expense   (2,051 )     (1,981 )
  Income from arbitration settlements   7,750       1,150,000  
  Other income   -       4,487  
               
(Loss) income from operations before income tax provision   (440,078 )     559,799  
Income tax provision   -       2,618  
(Loss) income from operations   (440,078 )     557,181  
               
Net (loss) income $ (440,078 )   $ 557,181  
               
Basic (loss) income per common share $ (0.13 )   $ 0.21  
Diluted (loss) income per common share $ (0.13 )   $ 0.14  
               
Weighted average shares outstanding - basic   3,352,159       2,701,404  
Weighted average shares outstanding - diluted   3,352,159       3,937,628  

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,  
    2017     2016  
Operating activities:                
  Net (loss) income   $ (440,078 )   $ 557,181  
Adjustments to reconcile consolidated net loss to net cash provided by (used in) operating activities:                
  Depreciation and amortization     30,073       20,666  
  Shares based compensation     -       22,501  
  Changes in operating assets and liabilities:                
    Accounts receivable     197,426       (1,441,964 )
    Costs and estimated earnings in excess of billings on uncompleted contracts     75,870       (79,975 )
    Prepaid expenses and other current assets     (9,764 )     (57,721 )
    Other assets     -       (3,778 )
    Accounts payable and accrued expenses     (421,159 )     204,952  
    Billings in excess of costs and estimated earnings on uncompleted contracts     806,085       543,006  
Net cash provided by (used in) operating activities     238,453       (235,132 )
                 
Investing activities:                
  Acquisition of property and equipment     (4,105 )     (30,803 )
Net cash used in investing activities     (4,105 )     (30,803 )
                 
Financing activities:                
  Repayment under loan payable obligations     (13,043 )     (29,762 )
Net cash used in financing activities     (13,043 )     (29,762 )
                 
Net change in cash, cash equivalents and restricted cash     221,305       (295,697 )
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   $ 2,380,649     $ 1,939,900  

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,
  2017   2016
Schedule of non-cash investing and financing activities:      
  Automobile financing $ -   $ 50,622
           

The accompanying notes are an integral part of these condensed consolidated financial statements.

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