Exhibit 99.1
PRESS RELEASE | SOURCE: WPCS International Incorporated |
Incorporated
WPCS Reports Record Revenue and $0.20 EPS for the 3rd Quarter
EXTON, PA — (PR Newswire-First Call) - March, 19, 2007) WPCS International Incorporated (Nasdaq: WPCS) a leader in design-build engineering services for specialty communication systems and wireless infrastructure, has reported its financial results for the third quarter ended January 31, 2007. For the quarter ended January 31, 2007, WPCS reported total revenue of approximately $18.1 million compared to $11.8 million for the same period a year ago, which represents an increase of approximately 53%. For the third quarter of FY2007, the reported net income was approximately $1.25 million or $0.20 per diluted share. For the same period last year, the reported net loss was approximately $9 million or $2.26 per diluted share which included a non-cash charge of approximately $9.7 million related to accounting for warrant liabilities.
For the nine months ended January 31, 2007, WPCS reported total revenue of approximately $52.3 million compared to $38.2 million for the same period a year ago, which represents an increase of approximately 37%. For the nine months of FY2007, the reported net income was approximately $3.2 million or $0.54 per diluted share. For the same period last year, the reported net loss was approximately $9.6 million or $2.48 per diluted share which included a non-cash charge of approximately $11.4 million related to accounting for warrant liabilities.
Andrew Hidalgo, CEO of WPCS International Incorporated, stated: “The management team at WPCS is very pleased with the third quarter results. The financial performance reported in the third quarter keeps us on track to achieve our FY2007 guidance estimates. For the third consecutive quarter, we achieved record revenue production. In addition, we have a strong balance sheet with approximately $23 million in cash, $29 million in working capital and only $4.7 million in long term debt. Our shareholder equity and net tangible asset value has increased to approximately $47 million and $26 million respectively, which are both all time highs. WPCS has also generated over $7 million in cash from operations through the first nine months of this fiscal year ended January 31, 2007. With a backlog of $25 million and a bid list of $69 million, we continue to see a robust market for our engineering services. We anticipate a strong finish for FY2007 and a very successful FY2008.”
About WPCS International Incorporated:
WPCS International Incorporated provides design-build engineering services for specialty communication systems and wireless infrastructure including site design, product integration and project management. The company has an extensive customer base that includes corporations, government entities and educational institutions. For more information, please visit our website at www.wpcs.com.
Statements about the company's future expectations, including future revenue and earnings and all other statements in this press release, other than historical facts, are "forward looking" statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward looking statements involve risks and uncertainties and are subject to change at any time. The company’s actual results could differ materially from expected results. In reflecting subsequent events or circumstances, the company undertakes no obligation to update forward-looking statements.
CONTACT:
Carol Lindley
WPCS International Incorporated
610-903-0400 x100
ir@wpcs.com
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
(Unaudited) | |||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||
January 31, | January 31, | ||||||||||||
2007 | 2006 | 2007 | 2006 | ||||||||||
(Note 1 ) | (Note 1 ) | ||||||||||||
REVENUE | $ | 18,121,405 | $ | 11,821,189 | $ | 52,310,727 | $ | 38,243,071 | |||||
COSTS AND EXPENSES: | |||||||||||||
Cost of revenue | 12,150,372 | 8,257,514 | 36,202,802 | 27,726,737 | |||||||||
Selling, general and administrative expenses | 3,538,395 | 2,204,838 | 9,874,455 | 6,820,446 | |||||||||
Depreciation and amortization | 310,074 | 212,334 | 880,965 | 633,394 | |||||||||
Total costs and expenses | 15,998,841 | 10,674,686 | 46,958,222 | 35,180,577 | |||||||||
OPERATING INCOME | 2,122,564 | 1,146,503 | 5,352,505 | 3,062,494 | |||||||||
OTHER EXPENSE (INCOME): | |||||||||||||
Interest expense | 112,387 | 70,391 | 326,823 | 182,433 | |||||||||
Interest income | (120,164 | ) | (22,994 | ) | (294,916 | ) | (40,238 | ) | |||||
Loss on change in fair value of warrants | - | 9,678,732 | - | 11,406,414 | |||||||||
INCOME (LOSS) BEFORE INCOME TAX PROVISION | 2,130,341 | (8,579,626 | ) | 5,320,598 | (8,486,115 | ) | |||||||
Income tax provision | 878,462 | 432,665 | 2,089,642 | 1,153,773 | |||||||||
NET INCOME (LOSS) | $ | 1,251,879 | ($9,012,291 | ) | $ | 3,230,956 | ($9,639,888 | ) | |||||
Basic net income (loss) per common share | $ | 0.23 | ($2.26 | ) | $ | 0.59 | ($2.48 | ) | |||||
Diluted net income (loss) per common share | $ | 0.20 | ($2.26 | ) | $ | 0.54 | ($2.48 | ) | |||||
Basic weighted average number of common shares outstanding | 5,547,671 | 3,995,768 | 5,454,911 | 3,890,382 | |||||||||
Diluted weighted average number of common shares outstanding | 6,323,169 | 3,995,768 | 6,011,224 | 3,890,382 |
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WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
January 31, | April 30, | ||||||
ASSETS | 2007 | 2006 | |||||
(Unaudited) | (Note 1) | ||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 23,028,985 | $ | 12,279,646 | |||
Accounts receivable, net of allowance of $98,786 and $104,786 at January 31, 2007 and April 30, 2006, respectively | 12,080,394 | 12,141,789 | |||||
Costs and estimated earnings in excess of billings on uncompleted contracts | 1,905,753 | 1,441,977 | |||||
Inventory | 1,660,981 | 1,204,540 | |||||
Prepaid expenses and other current assets | 682,273 | 286,625 | |||||
Deferred income taxes | 51,000 | 78,000 | |||||
Total current assets | 39,409,386 | 27,432,577 | |||||
PROPERTY AND EQUIPMENT, net | 1,930,702 | 1,352,216 | |||||
CUSTOMER LISTS, net | 1,426,805 | 864,388 | |||||
GOODWILL | 19,019,452 | 14,239,918 | |||||
DEBT ISSUANCE COSTS, net | 71,468 | 111,091 | |||||
DEFERRED INCOME TAXES | 73,000 | 51,000 | |||||
OTHER ASSETS | 233,130 | 71,128 | |||||
Total assets | $ | 62,163,943 | $ | 44,122,318 |
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WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (continued) | |||||||
January 31, | April 30, | ||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | 2007 | 2006 | |||||
(Unaudited) | (Note 1) | ||||||
CURRENT LIABILITIES: | |||||||
Current portion of capital lease obligation | $ | 8,960 | $ | - | |||
Current portion of loans payable | 269,056 | 231,065 | |||||
Accounts payable and accrued expenses | 5,895,701 | 4,989,861 | |||||
Billings in excess of costs and estimated earnings on uncompleted contracts | 2,269,810 | 1,085,312 | |||||
Deferred revenue | 493,426 | 128,052 | |||||
Due to shareholders | 747,000 | 381,377 | |||||
Income taxes payable | 588,443 | 420,066 | |||||
Deferred income taxes | 25,000 | 21,000 | |||||
Total current liabilities | 10,297,396 | 7,256,733 | |||||
Borrowings under line of credit | 4,437,446 | 3,000,000 | |||||
Loans payable, net of current portion | 247,438 | 256,692 | |||||
Due to shareholders, net of current portion | - | 514,623 | |||||
Deferred income taxes | 499,000 | 531,000 | |||||
Total liabilities | 15,481,280 | 11,559,048 | |||||
COMMITMENTS AND CONTINGENCIES | |||||||
SHAREHOLDERS' EQUITY: | |||||||
Preferred stock - $0.0001 par value, 5,000,000 shares authorized, none issued | - | - | |||||
Common stock - $0.0001 par value, 75,000,000 shares authorized, 6,616,415 and 5,264,284 shares issued and outstanding at January 31, 2007 and April 30, 2006, respectively | 662 | 526 | |||||
Additional paid-in capital | 44,413,431 | 33,525,130 | |||||
Retained earnings (accumulated deficit) | 2,268,570 | (962,386 | ) | ||||
Total shareholders' equity | 46,682,663 | 32,563,270 | |||||
Total liabilities and shareholders' equity | $ | 62,163,943 | $ | 44,122,318 |
Note 1: Certain reclassifications have been made to prior period financial statements to conform to current presentation.
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Reconciliation of Non-GAAP Financial Measure (Unaudited)
Net Tangible Asset Value
Net tangible asset value is defined as (1) total assets, less (2) total liabilities, goodwill and customer lists. Our measure of net tangible asset value may not be comparable to similarly titled measures of other companies.
January 31, | April 30, | |||||||||
2007 | 2006 | |||||||||
Total Assets, as reported | $ | 62,163,943 | $ | 44,122,318 | ||||||
Deduct: Total liabilities | (15,481,280 | ) | (11,559,048 | ) | ||||||
Goodwill | (19,019,452 | ) | (14,239,918 | ) | ||||||
Customer lists | (1,426,805 | ) | (864,388 | ) | ||||||
Net Tangible Asset Value | $ | 26,236,406 | $ | 17,458,964 | ||||||
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