Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Jul. 31, 2017 | Sep. 12, 2017 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jul. 31, 2017 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | WPCS INTERNATIONAL INC | |
Entity Central Index Key | 1,086,745 | |
Current Fiscal Year End Date | --04-30 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | WPCS | |
Entity Common Stock, Shares Outstanding | 3,352,159 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jul. 31, 2017 | Apr. 30, 2017 |
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 |
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 | ||
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 |
Convertible Series H [Member] | ||
Stockholders' equity | ||
Preferred stock | 1,242 | 1,242 |
Convertible Series H-1 [Member] | ||
Stockholders' equity | ||
Preferred stock | 437,530 | 437,530 |
Convertible Series H-2 [Member] | ||
Stockholders' equity | ||
Preferred stock | 230,721 | 230,721 |
Convertible Series H-3 [Member] | ||
Stockholders' equity | ||
Preferred stock | $ 475,185 | $ 475,185 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS [Parenthetical] - USD ($) | Jul. 31, 2017 | Apr. 30, 2017 |
Allowance for accounts receivable | $ 247,000 | $ 247,000 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 3,352,159 | 3,352,159 |
Common stock, shares outstanding | 3,352,159 | 3,352,159 |
Convertible Series H [Member] | ||
Preferred stock, shares authorized | 8,500 | 8,500 |
Preferred stock, shares issued | 8 | 8 |
Preferred Stock, Shares Outstanding | 8 | 8 |
Preferred Stock, liquidation preference (in dollars) | $ 1,000 | $ 1,000 |
Convertible Series H-1 [Member] | ||
Preferred stock, shares authorized | 9,488 | 9,488 |
Preferred stock, shares issued | 4,289 | 4,289 |
Preferred Stock, Shares Outstanding | 4,289 | 4,289 |
Preferred Stock, liquidation preference (in dollars) | $ 712,000 | $ 712,000 |
Convertible Series H-2 [Member] | ||
Preferred stock, shares authorized | 3,500 | 3,500 |
Preferred stock, shares issued | 3,305 | 3,305 |
Preferred Stock, Shares Outstanding | 3,305 | 3,305 |
Preferred Stock, liquidation preference (in dollars) | $ 400,000 | $ 400,000 |
Convertible Series H-3 [Member] | ||
Preferred stock, shares authorized | 9,500 | 9,500 |
Preferred stock, shares issued | 7,017 | 7,017 |
Preferred Stock, Shares Outstanding | 7,017 | 7,017 |
Preferred Stock, liquidation preference (in dollars) | $ 968,000 | $ 968,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | |
Jul. 31, 2017 | Jul. 31, 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 |
Costs and expenses | 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 | 0 | 4,487 |
(Loss) income from operations before income tax provision | (440,078) | 559,799 |
Income tax provision | 0 | 2,618 |
(Loss) income from operations | (440,078) | 557,181 |
Discontinued operations: | ||
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 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Jul. 31, 2017 | Jul. 31, 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 | 0 | 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 | 0 | (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 |
Schedule of non-cash investing and financing activities: | ||
Automobile financing | $ 0 | $ 50,622 |
DESCRIPTION OF THE BUSINESS AND
DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION | 3 Months Ended |
Jul. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION | NOTE 1 DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION Description of the Business WPCS International Incorporated, a Delaware corporation (“WPCS”) and its wholly and majority-owned subsidiaries (collectively, the “Company”) currently specializes in low voltage communications, audio-visual and security contracting services, conducting business in one segment at one operations center, through its wholly-owned domestic subsidiary, WPCS International - Suisun City, Inc. (“Suisun City Operations”). During the year ended April 30, 2017 the Company also conducted operations from its wholly-owned Texas subsidiary, WPCS International-Texas, Inc. (“Texas Operations”), however, as of April 30, 2017, the Texas Operations has been closed. The Company is a full-service low voltage contractor that specializes in the installation and service of Voice & Data Networks, Security Systems, Audio-Visual Solutions, and Distributed Antenna Systems and provides experienced project management and delivers complex projects to key vertical markets that include Healthcare, Education, Transportation, Energy & Utilities, Oil & Gas, Manufacturing, Commercial Real Estate, Financial, Government, etc. Basis of Presentation The condensed consolidated financial statements of WPCS and its wholly and majority-owned subsidiaries included in this Report for the three months ended July 31, 2017 and 2016, reflect the accounts of current entities as continued operations, as discussed below. Results of operations for the three months ended July 31, 2017 and 2016 include the results of: (i) WPCS (which primarily reflects corporate operating expenses and nonoperating income); (ii) Suisun City Operations and the Texas Operations, (the Texas Operations were closed in February 2017 and therefore the Suisun Operation remains the Company’s only active operating subsidiary); (iii) WPCS Incorporated, an inactive subsidiary; and (iv) WPCS International Trenton, Inc. (“Trenton Operations”), which operations were closed in September 2013. The unaudited condensed consolidated financial information furnished herein reflects all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, considered necessary for a fair presentation of the financial position and the results of operations and cash flows of the Company for the periods presented. All intercompany accounts and transactions have been eliminated in consolidation. These unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. These interim condensed consolidated financial statements should be read in conjunction with the financial statements included in the Annual Report on Form 10-K for the fiscal year ended April 30, 2017. The results of operations for the three months ended July 31, 2017 are not necessarily indicative of the results to be expected for the full fiscal year. |
LIQUIDITY AND CAPITAL RESOURCES
LIQUIDITY AND CAPITAL RESOURCES | 3 Months Ended |
Jul. 31, 2017 | |
Liquidity and Capital Resources [Abstract] | |
LIQUIDITY AND CAPITAL RESOURCES | NOTE 2 LIQUIDITY AND CAPITAL RESOURCES As of July 31, 2017, the Company had a working capital surplus of approximately $ 2,436,000 2,381,000 The Company's future plans and growth are dependent on its ability to increase revenues and continue its business development efforts surrounding its contract award backlog. If the Company continues to incur losses and revenues do not generate from the backlog as expected, the Company may need to raise additional capital to expand its business and continue as a going concern. The Company currently anticipates that its current cash position will be sufficient to meet its working capital requirements to continue its sales and marketing efforts for at least 12 months from the filing date of this report. If in the future the Company’s plans or assumptions change or prove to be inaccurate, the Company may need to raise additional funds through public or private debt or equity offerings, financings, corporate collaborations, or other means. The Company may also be required to reduce operating expenditures or investments in its infrastructure. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Jul. 31, 2017 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the Form 10-K for the year ended April 30, 2017. Leases In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842) Leases (Topic 840) Revenue from Contracts with Customers In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 amends the guidance for revenue recognition to replace numerous, industry-specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The amendments of ASU 2014-09 were effective for reporting periods beginning after December 15, 2016, with early adoption prohibited. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Subsequent to issuing ASU 2014-09, the FASB issued the following amendments concerning the adoption and clarification of ASU 2014-09. In August 2015, the FASB issued ASU No. 2015-14 “Revenue from Contracts with Customers (Topic 606), Deferral of the Effective Date” (“ASU 2015-14”), which deferred the effective date one year. As a result, the amendments of ASU 2014-09 are effective for reporting periods beginning after December 15, 2017, with early adoption permitted only as of annual reporting periods beginning after December 15, 2016. In March 2016, the FASB issued ASU No. 2016-08 “Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue versus Net)” (“ASU 2016-08”), which clarifies the implementation guidance on principal versus agent considerations in the new revenue recognition standard. ASU 2016-08 clarifies how an entity should identify the unit of accounting (i.e. the specified good or service) for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. In April 2016, the FASB issued ASU No. 2016-10 “Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing” (“ASU 2016-10”), which reduces the complexity when applying the guidance for identifying performance obligations and improves the operability and understandability of the license implementation guidance. In May 2016, the FASB issued ASU No. 2016-12 “Revenue from Contracts with Customers (Topic 606), Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”), which amends the guidance on transition, collectability, noncash consideration and the presentation of sales and other similar taxes. ASU 2016-12 clarifies that, for a contract to be considered completed at transition, all (or substantially all) of the revenue must have been recognized under legacy GAAP. In addition, ASU 2016-12 clarifies how an entity should evaluate the collectability threshold and when an entity can recognize nonrefundable consideration received as revenue if an arrangement does not meet the standard’s contract criteria. In December 2016, the FASB issued an update (“ASU 2016-20”) to ASC 606, Technical Corrections and Improvements, which outlines technical corrections to certain aspects of the new revenue recognition standard such as provisions for losses on construction type contracts and disclosure of remaining performance obligations, among other aspects. The Company is currently evaluating the potential impact the adoption of these ASUs may have on its financial statements and related disclosures. Business Combinations In January 2017, the FASB issued an ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business. The amendments in this Update is to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The Company is currently evaluating the impact of adopting this guidance. Accounting standards that have been issued or proposed by the Financial Accounting Standards Board (“FASB”), SEC or other standard setting bodies that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. |
CONCENTRATIONS
CONCENTRATIONS | 3 Months Ended |
Jul. 31, 2017 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS | NOTE 4 CONCENTRATIONS Accounts Receivable As of July 31, 2017 April 30, 2017 Customer A 21 % 24 % Customer B 17 % 12 % Customer C - 10 % The accounts receivable also included retainage receivable of $999,000 and $326,000 at July 31, 2017 and April 30, 2017, respectively, and both the retainage and aged accounts receivable are expected to be collected. Revenue Recognition For the three months ended July 31, 2017 2016 Customer A 24 % - Customer B 15 % - Customer C 10 % - - Represents less than 10% |
BASIC AND DILUTED NET (LOSS) IN
BASIC AND DILUTED NET (LOSS) INCOME COMMON SHARE | 3 Months Ended |
Jul. 31, 2017 | |
Earnings Per Share [Abstract] | |
BASIC AND DILUTED NET (LOSS) INCOME PER COMMON SHARE | NOTE 5 BASIC AND DILUTED NET (LOSS) INCOME PER COMMON SHARE Basic and diluted net (loss) income per common share is computed as net (loss) income by the weighted average number of common shares outstanding for the period. For the three months ended July 31, 2017 2016 Numerator: Net (loss) income, basic and diluted $ (440,078) $ 557,181 Denominator: Weighted average shares outstanding basic 3,352,159 2,701,404 Stock options - 160,524 Series H and H-1 convertible preferred stock - 1,075,700 Weighted average shares outstanding diluted 3,352,159 3,937,628 Basic (loss) income per common share $ (0.13) $ 0.21 Diluted (loss) income per common share $ (0.13) $ 0.14 As of July 31, 2017 2016 Common stock equivalents: Common stock options 3,253,000 865,000 Series H, H-1, H-2 and H-3 preferred stock 1,462,000 - Common stock purchase warrants 2,893,000 1,295,000 Totals 7,608,000 2,160,000 |
COSTS AND ESTIMATED EARNINGS ON
COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS | 3 Months Ended |
Jul. 31, 2017 | |
Contractors [Abstract] | |
COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS | NOTE 6 COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS The asset, “Costs and estimated earnings in excess of billings on uncompleted contracts”, represents revenue recognized in excess of amounts billed. The liability, “Billings in excess of costs and estimated earnings on uncompleted contracts”, represents billings in excess of revenue recognized. July 31, 2017 April 30, 2017 Costs incurred on uncompleted contracts $ 17,191,287 $ 16,362,011 Estimated contract earnings 3,849,901 3,714,584 21,041,188 20,076,595 Less: Billings to date 23,618,114 21,771,566 Total $ (2,576,926) $ (1,694,971) Costs and estimated earnings in excess of billings on uncompleted contracts $ 334,956 $ 410,826 Billings in excess of cost and estimated earnings on uncompleted contracts 2,911,882 2,105,797 Total $ (2,576,926) $ (1,694,971) Revisions in the estimated gross profits on contracts and contract amounts are made in the period in which circumstances requiring the revisions become known. Although management believes it has established adequate procedures for estimating costs to complete on open contracts, it is at least reasonably possible that additional significant costs could occur on contracts prior to completion. |
LOANS PAYABLE
LOANS PAYABLE | 3 Months Ended |
Jul. 31, 2017 | |
Debt Disclosure [Abstract] | |
LOANS PAYABLE | NOTE 7 LOANS PAYABLE Carrying Value Stated as of Estimated Future Payment Maturity Date Interest Rate July 31, 2017 Within 1 Year After 1 year 0% automobile loan payable May 2019 - June 2019 0.0 % $ 16,000 $ 9,000 $ 7,000 1% automobile loan payable November 2022 1.0 % 22,000 5,000 17,000 3% automobile loan payable November 2022 3.0 % 23,000 5,000 18,000 4% automobile loan payable December 2016 - January 2020 4.0 % 21,000 8,000 13,000 5% automobile loan payable January 2020 - February 2020 5.0 % 46,000 17,000 29,000 7% automobile loan payable June 2019 7.0 % 22,000 5,000 17,000 8% automobile loan payable October 2021 8.0 % 14,000 3,000 11,000 $ 164,000 $ 52,000 $ 112,000 Carrying Value Stated as of Estimated Future Payment Maturity Date Interest Rate April 30, 2017 Within 1 Year After 1 year 0% automobile loan payable April 2018 - June 2019 0.0 % $ 18,000 $ 9,000 $ 9,000 1% automobile loan payable November 2022 1.0 % 23,000 5,000 18,000 3% automobile loan payable November 2022 3.0 % 24,000 5,000 19,000 4% automobile loan payable December 2016 - January 2020 4.0 % 25,000 9,000 16,000 5% automobile loan payable January 2020 - February 2020 5.0 % 50,000 17,000 33,000 7% automobile loan payable June 2019 7.0 % 23,000 5,000 18,000 8% automobile loan payable October 2021 8.0 % 15,000 3,000 12,000 $ 178,000 $ 53,000 $ 125,000 |
INCOME FROM ARBITRATION SETTLEM
INCOME FROM ARBITRATION SETTLEMENTS | 3 Months Ended |
Jul. 31, 2017 | |
Income From Legal Settlements [Abstract] | |
INCOME FROM ARBITRATION SETTLEMENTS | NOTE 8 INCOME FROM ARBITRATION SETTLEMENTS For the three months ended July 31, 2017, the Company received approximately $ 8,000 On June 16, 2016, the Company entered into a global settlement agreement and mutual release to resolve all disputes and claims regarding the construction of the Cooper Medical School at Rowan University, located in Camden, New Jersey, in which the Company served as an electrical prime contractor. As a result of such settlement, the Company received proceeds of $ 1,150,000 |
BANK LINE OF CREDIT
BANK LINE OF CREDIT | 3 Months Ended |
Jul. 31, 2017 | |
Line of Credit Facility [Abstract] | |
BANK LINE OF CREDIT | NOTE 9 BANK LINE OF CREDIT On May 20, 2015, the Company entered into an asset-based revolving credit line agreement with a California-based bank, which provides a $ 1,000,000 2 1,000,000 As of the filing date of this quarterly report on Form 10-Q, the Company has not drawn down on the Credit Line. |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 3 Months Ended |
Jul. 31, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | NOTE 10 SUBSEQUENT EVENT On August 15, 2017, the Company extended the expiration date of the Credit Line to August 15, 2018 On September 6, 2017, the Company, DC Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of the Company (“Merger Sub”), and DropCar, Inc., a Delaware corporation (“DropCar”), entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”), pursuant to which, among other things, subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Merger Sub will merge with and into DropCar, with DropCar becoming a wholly-owned subsidiary of the Company and the surviving corporation of the merger (the “Merger”). The Merger is intended to qualify for federal income tax purposes as a tax-free reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended. Subject to the terms and conditions of the Merger Agreement, at the closing of the Merger (the “Closing”), (a) each outstanding share of DropCar common stock and DropCar preferred stock will be converted into the right to receive a number of shares of the Company’ common stock (“WPCS Common Stock”) equal to the Exchange Ratio (as defined below); and (b) each outstanding DropCar warrant that has not previously been exercised prior to the Closing will be assumed by the Company. Under the exchange ratio formula in the Merger Agreement (the “Exchange Ratio”), as of immediately after the Merger, the former DropCar securityholders (including the investors in the Company Closing Financing (as defined below) and certain DropCar advisors) are expected to own approximately 85% of the outstanding shares of the Company Common Stock on a fully-diluted basis and securityholders of the Company as of immediately prior to the Merger are expected to own approximately 15% of the outstanding shares of WPCS Common Stock on a fully-diluted basis. The Exchange Ratio and respective ownership of the DropCar securityholders and existing WPCS equity holders is subject to adjustment in the event that the Company’s “Net Cash” (as defined in the Merger Agreement) is less than, or greater than, $419,000 as of the Closing. For purposes of calculating the Exchange Ratio, the number of outstanding shares of WPCS Common Stock immediately before the Merger takes into account the dilutive effect, calculated using the Treasury Method under U.S. GAAP, of the shares of WPCS Common Stock underlying options (but not warrants) outstanding as of the date of the Merger Agreement using an assumed value of $2.50 per share of WPCS Common Stock. In addition, the shares underlying warrants to purchase DropCar common stock will be included in the DropCar 85% allocation. All the shares of the Company’s convertible preferred stock and options and warrants to purchase shares of WPCS Common Stock will remain outstanding after the Merger and all outstanding DropCar warrants will be exchanged for warrants to purchase WPCS Common Stock based upon the Exchange Ratio. No fractional shares will be issued in the Merger; rather, the Company will pay cash in lieu of any such fractional shares. As a condition to the Closing, DropCar is obligated to raise up to $5 million, but not less than $4 million, in equity financing (the “Company Closing Financing”). The Company Closing Financing is expected to close immediately prior to or simultaneously with the Closing. In addition, the consummation of the Merger is subject to customary conditions, including, without limitation, (a) approval by the Company and DropCar stockholders of the Merger Agreement and the transactions contemplated thereby; (b) the absence of any law, order, injunction or other legal restraint prohibiting the Merger; and (c) receipt of approval from NASDAQ to list the shares of WPCS common stock on the NASDAQ Capital Market post-Merger. Moreover, each party’s obligation to consummate the Merger is subject to certain other conditions, including, without limitation, (i) the accuracy of the other party’s representations and warranties (subject to customary qualifiers), and (ii) the other party’s compliance with its covenants and agreements contained in the Merger Agreement (subject to customary qualifiers). The Merger Agreement contains specified termination rights for both the Company and DropCar, and further provides that, upon termination of the Merger Agreement under specified circumstances, either party may be required to pay the other party a termination fee of $250,000, which, under specified circumstances, may include reimbursement for various expenses incurred in connection with the proposed Merger up to a maximum of $125,000. |
SUMMARY OF SIGNIFICANT ACCOUN16
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Jul. 31, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the Form 10-K for the year ended April 30, 2017. |
Recent Accounting Standards | Recent Accounting Standards Leases In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842) Leases (Topic 840) Revenue from Contracts with Customers In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 amends the guidance for revenue recognition to replace numerous, industry-specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The amendments of ASU 2014-09 were effective for reporting periods beginning after December 15, 2016, with early adoption prohibited. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Subsequent to issuing ASU 2014-09, the FASB issued the following amendments concerning the adoption and clarification of ASU 2014-09. In August 2015, the FASB issued ASU No. 2015-14 “Revenue from Contracts with Customers (Topic 606), Deferral of the Effective Date” (“ASU 2015-14”), which deferred the effective date one year. As a result, the amendments of ASU 2014-09 are effective for reporting periods beginning after December 15, 2017, with early adoption permitted only as of annual reporting periods beginning after December 15, 2016. In March 2016, the FASB issued ASU No. 2016-08 “Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue versus Net)” (“ASU 2016-08”), which clarifies the implementation guidance on principal versus agent considerations in the new revenue recognition standard. ASU 2016-08 clarifies how an entity should identify the unit of accounting (i.e. the specified good or service) for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. In April 2016, the FASB issued ASU No. 2016-10 “Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing” (“ASU 2016-10”), which reduces the complexity when applying the guidance for identifying performance obligations and improves the operability and understandability of the license implementation guidance. In May 2016, the FASB issued ASU No. 2016-12 “Revenue from Contracts with Customers (Topic 606), Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”), which amends the guidance on transition, collectability, noncash consideration and the presentation of sales and other similar taxes. ASU 2016-12 clarifies that, for a contract to be considered completed at transition, all (or substantially all) of the revenue must have been recognized under legacy GAAP. In addition, ASU 2016-12 clarifies how an entity should evaluate the collectability threshold and when an entity can recognize nonrefundable consideration received as revenue if an arrangement does not meet the standard’s contract criteria. In December 2016, the FASB issued an update (“ASU 2016-20”) to ASC 606, Technical Corrections and Improvements, which outlines technical corrections to certain aspects of the new revenue recognition standard such as provisions for losses on construction type contracts and disclosure of remaining performance obligations, among other aspects. The Company is currently evaluating the potential impact the adoption of these ASUs may have on its financial statements and related disclosures. Business Combinations In January 2017, the FASB issued an ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business. The amendments in this Update is to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The Company is currently evaluating the impact of adopting this guidance. Accounting standards that have been issued or proposed by the Financial Accounting Standards Board (“FASB”), SEC or other standard setting bodies that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. |
CONCENTRATIONS (Tables)
CONCENTRATIONS (Tables) | 3 Months Ended |
Jul. 31, 2017 | |
Accounts Receivable [Member] | |
Concentration Risk [Line Items] | |
Schedules of Concentration of Risk, by Risk Factor | The concentration of accounts receivable as of July 31, 2017 and April 30, 2017, respectively are as follows: As of July 31, 2017 April 30, 2017 Customer A 21 % 24 % Customer B 17 % 12 % Customer C - 10 % |
Sales Revenue, Net [Member] | |
Concentration Risk [Line Items] | |
Schedules of Concentration of Risk, by Risk Factor | The concentration of revenue recognition for the three months ended July 31, 2017 and 2016, respectively are as follows: For the three months ended July 31, 2017 2016 Customer A 24 % - Customer B 15 % - Customer C 10 % - |
BASIC AND DILUTED NET (LOSS) 18
BASIC AND DILUTED NET (LOSS) INCOME PER COMMON SHARE (Tables) | 3 Months Ended |
Jul. 31, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | For the three months ended July 31, 2017 2016 Numerator: Net (loss) income, basic and diluted $ (440,078) $ 557,181 Denominator: Weighted average shares outstanding basic 3,352,159 2,701,404 Stock options - 160,524 Series H and H-1 convertible preferred stock - 1,075,700 Weighted average shares outstanding diluted 3,352,159 3,937,628 Basic (loss) income per common share $ (0.13) $ 0.21 Diluted (loss) income per common share $ (0.13) $ 0.14 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following securities were excluded from the weighted average dilutive common shares outstanding because their inclusion would have been antidilutive. As of July 31, 2017 2016 Common stock equivalents: Common stock options 3,253,000 865,000 Series H, H-1, H-2 and H-3 preferred stock 1,462,000 - Common stock purchase warrants 2,893,000 1,295,000 Totals 7,608,000 2,160,000 |
COSTS AND ESTIMATED EARNINGS 19
COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS (Tables) | 3 Months Ended |
Jul. 31, 2017 | |
Contractors [Abstract] | |
Schedule of Costs and Estimated Earnings on Uncompleted Contracts | Costs and estimated earnings on uncompleted contracts consist of the following at July 31, 2017 and April 30, 2017: July 31, 2017 April 30, 2017 Costs incurred on uncompleted contracts $ 17,191,287 $ 16,362,011 Estimated contract earnings 3,849,901 3,714,584 21,041,188 20,076,595 Less: Billings to date 23,618,114 21,771,566 Total $ (2,576,926) $ (1,694,971) Costs and estimated earnings in excess of billings on uncompleted contracts $ 334,956 $ 410,826 Billings in excess of cost and estimated earnings on uncompleted contracts 2,911,882 2,105,797 Total $ (2,576,926) $ (1,694,971) |
LOANS PAYABLE (Tables)
LOANS PAYABLE (Tables) | 3 Months Ended |
Jul. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The following tables summarize outstanding loans payable related to automobiles as of July 31, 2017 and April 30, 2017, respectively: Carrying Value Stated as of Estimated Future Payment Maturity Date Interest Rate July 31, 2017 Within 1 Year After 1 year 0% automobile loan payable May 2019 - June 2019 0.0 % $ 16,000 $ 9,000 $ 7,000 1% automobile loan payable November 2022 1.0 % 22,000 5,000 17,000 3% automobile loan payable November 2022 3.0 % 23,000 5,000 18,000 4% automobile loan payable December 2016 - January 2020 4.0 % 21,000 8,000 13,000 5% automobile loan payable January 2020 - February 2020 5.0 % 46,000 17,000 29,000 7% automobile loan payable June 2019 7.0 % 22,000 5,000 17,000 8% automobile loan payable October 2021 8.0 % 14,000 3,000 11,000 $ 164,000 $ 52,000 $ 112,000 Carrying Value Stated as of Estimated Future Payment Maturity Date Interest Rate April 30, 2017 Within 1 Year After 1 year 0% automobile loan payable April 2018 - June 2019 0.0 % $ 18,000 $ 9,000 $ 9,000 1% automobile loan payable November 2022 1.0 % 23,000 5,000 18,000 3% automobile loan payable November 2022 3.0 % 24,000 5,000 19,000 4% automobile loan payable December 2016 - January 2020 4.0 % 25,000 9,000 16,000 5% automobile loan payable January 2020 - February 2020 5.0 % 50,000 17,000 33,000 7% automobile loan payable June 2019 7.0 % 23,000 5,000 18,000 8% automobile loan payable October 2021 8.0 % 15,000 3,000 12,000 $ 178,000 $ 53,000 $ 125,000 |
DESCRIPTION OF THE BUSINESS A21
DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION (Details Textual) | 12 Months Ended |
Apr. 30, 2017 | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |
Percentage Of International Operation | 0.00% |
Number of Reportable Segments | 1 |
Number of Operating Segments | 1 |
LIQUIDITY AND CAPITAL RESOURC22
LIQUIDITY AND CAPITAL RESOURCES (Details Textual) - USD ($) | Jul. 31, 2017 | Apr. 30, 2017 | Jul. 31, 2016 | Apr. 30, 2016 |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||
Working Capital Surplus | $ 2,436,000 | |||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | $ 2,380,649 | $ 2,159,344 | $ 1,939,900 | $ 2,235,597 |
CONCENTRATIONS (Details)
CONCENTRATIONS (Details) | 3 Months Ended | 12 Months Ended | |
Jul. 31, 2017 | Jul. 31, 2016 | Apr. 30, 2017 | |
Accounts Receivable [Member] | Customer A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 21.00% | 24.00% | |
Accounts Receivable [Member] | Customer B [Member] | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 17.00% | 12.00% | |
Accounts Receivable [Member] | Customer C [Member] | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 0.00% | 10.00% | |
Sales Revenue, Net [Member] | Customer A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 24.00% | 0.00% | |
Sales Revenue, Net [Member] | Customer B [Member] | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 15.00% | 0.00% | |
Sales Revenue, Net [Member] | Customer C [Member] | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 10.00% | 0.00% |
CONCENTRATIONS (Details Textual
CONCENTRATIONS (Details Textual) - USD ($) | Jul. 31, 2017 | Apr. 30, 2017 |
Concentration Risk [Line Items] | ||
Contract Receivable Retainage, Total | $ 999,000 | $ 326,000 |
BASIC AND DILUTED NET (LOSS) 25
BASIC AND DILUTED NET (LOSS) INCOME COMMON SHARE (Details) - USD ($) | 3 Months Ended | |
Jul. 31, 2017 | Jul. 31, 2016 | |
Numerator: | ||
Net (loss) income, basic and diluted | $ (440,078) | $ 557,181 |
Denominator: | ||
Weighted average shares outstanding - basic | 3,352,159 | 2,701,404 |
Stock options | 0 | 160,524 |
Series H and H-1 convertible preferred stock | 0 | 1,075,700 |
Weighted average shares outstanding - diluted | 3,352,159 | 3,937,628 |
Basic (loss) income per common share | $ (0.13) | $ 0.21 |
Diluted (loss) income per common share | $ (0.13) | $ 0.14 |
BASIC AND DILUTED NET (LOSS) 26
BASIC AND DILUTED NET (LOSS) INCOME COMMON SHARE (Details 1) - shares | 3 Months Ended | |
Jul. 31, 2017 | Jul. 31, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 7,608,000 | 2,160,000 |
Common stock options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 3,253,000 | 865,000 |
Series H, H-1, H-2 and H-3 Preferred Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,462,000 | 0 |
Common stock purchase warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 2,893,000 | 1,295,000 |
COSTS AND ESTIMATED EARNINGS 27
COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS (Details) - USD ($) | Jul. 31, 2017 | Apr. 30, 2017 |
Costs incurred on uncompleted contracts | $ 17,191,287 | $ 16,362,011 |
Estimated contract earnings | 3,849,901 | 3,714,584 |
Gross Total | 21,041,188 | 20,076,595 |
Less: Billings to date | 23,618,114 | 21,771,566 |
Total | (2,576,926) | (1,694,971) |
Costs and estimated earnings in excess of billings on uncompleted contracts | 334,956 | 410,826 |
Billings in excess of cost and estimated earnings on uncompleted contracts | 2,911,882 | 2,105,797 |
Total | $ (2,576,926) | $ (1,694,971) |
LOANS PAYABLE (Details)
LOANS PAYABLE (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Jul. 31, 2017 | Apr. 30, 2017 | |
Debt Instrument [Line Items] | ||
Carrying Value | $ 164,000 | $ 178,000 |
Estimated Future Payment Within 1 Year | 52,000 | 53,000 |
Estimated Future Payment After 1 year | $ 112,000 | $ 125,000 |
0% automobile loan payable [Member] | ||
Debt Instrument [Line Items] | ||
Maturity Date | MAy 2019 - June 2019 | April 2018 - June 2019 |
Stated Interest Rate | 0.00% | 0.00% |
Carrying Value | $ 16,000 | $ 18,000 |
Estimated Future Payment Within 1 Year | 9,000 | 9,000 |
Estimated Future Payment After 1 year | $ 7,000 | $ 9,000 |
1% automobile loan payable [Member] | ||
Debt Instrument [Line Items] | ||
Maturity Date | November 2,022 | November 2,022 |
Stated Interest Rate | 1.00% | 1.00% |
Carrying Value | $ 22,000 | $ 23,000 |
Estimated Future Payment Within 1 Year | 5,000 | 5,000 |
Estimated Future Payment After 1 year | $ 17,000 | $ 18,000 |
3% automobile loan payable [Member] | ||
Debt Instrument [Line Items] | ||
Maturity Date | November 2,022 | November 2,022 |
Stated Interest Rate | 3.00% | 3.00% |
Carrying Value | $ 23,000 | $ 24,000 |
Estimated Future Payment Within 1 Year | 5,000 | 5,000 |
Estimated Future Payment After 1 year | $ 18,000 | $ 19,000 |
4% automobile loan payable [Member] | ||
Debt Instrument [Line Items] | ||
Maturity Date | December 2016 - January 2020 | December 2016 - January 2020 |
Stated Interest Rate | 4.00% | 4.00% |
Carrying Value | $ 21,000 | $ 25,000 |
Estimated Future Payment Within 1 Year | 8,000 | 9,000 |
Estimated Future Payment After 1 year | $ 13,000 | $ 16,000 |
5% automobile loan payable [Member] | ||
Debt Instrument [Line Items] | ||
Maturity Date | January 2020 - February 2020 | January 2020 - February 2020 |
Stated Interest Rate | 5.00% | 5.00% |
Carrying Value | $ 46,000 | $ 50,000 |
Estimated Future Payment Within 1 Year | 17,000 | 17,000 |
Estimated Future Payment After 1 year | $ 29,000 | $ 33,000 |
7% automobile loan payable [Member] | ||
Debt Instrument [Line Items] | ||
Maturity Date | June 2,019 | June 2,019 |
Stated Interest Rate | 7.00% | 7.00% |
Carrying Value | $ 22,000 | $ 23,000 |
Estimated Future Payment Within 1 Year | 5,000 | 5,000 |
Estimated Future Payment After 1 year | $ 17,000 | $ 18,000 |
8% automobile loan payable [Member] | ||
Debt Instrument [Line Items] | ||
Maturity Date | October 2,021 | October 2,021 |
Stated Interest Rate | 8.00% | 8.00% |
Carrying Value | $ 14,000 | $ 15,000 |
Estimated Future Payment Within 1 Year | 3,000 | 3,000 |
Estimated Future Payment After 1 year | $ 11,000 | $ 12,000 |
INCOME FROM ARBITRATION SETTL29
INCOME FROM ARBITRATION SETTLEMENTS (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended |
Jun. 16, 2016 | Jul. 31, 2017 | |
Cooper Medical School [Member] | ||
Proceeds from Legal Settlements | $ 1,150,000 | |
BTX Trader Inc [Member] | ||
Proceeds from Legal Settlements | $ 8,000 |
BANK LINE OF CREDIT (Details Te
BANK LINE OF CREDIT (Details Textual) - Revolving Credit Facility [Member] - USD ($) | 1 Months Ended | |
May 20, 2015 | Jul. 31, 2017 | |
Line of Credit Facility [Line Items] | ||
Proceeds from Lines of Credit | $ 1,000,000 | |
Line of Credit Facility, Initiation Date | May 20, 2015 | |
Line of Credit Facility, Interest Rate During Period | 2.00% | |
Line of Credit Facility, Expiration Date | Aug. 15, 2017 | |
Long-term Line of Credit | $ 1,000,000 |
SUBSEQUENT EVENT (Details Textu
SUBSEQUENT EVENT (Details Textual) - Subsequent Event [Member] - USD ($) | Sep. 06, 2017 | Aug. 15, 2017 |
Subsequent Event [Line Items] | ||
Line of Credit Facility, Expiration Date | Aug. 15, 2018 | |
Percentage Of Common Stock Outstanding | 15.00% | |
Description Of Equity Financing | As a condition to the Closing, DropCar is obligated to raise up to $5 million, but not less than $4 million, in equity financing (the “Company Closing Financing”). The Company Closing Financing is expected to close immediately prior to or simultaneously with the Closing. In addition, the consummation of the Merger is subject to customary conditions, including, without limitation, (a) approval by the Company and DropCar stockholders of the Merger Agreement and the transactions contemplated thereby; (b) the absence of any law, order, injunction or other legal restraint prohibiting the Merger; and (c) receipt of approval from NASDAQ to list the shares of WPCS common stock on the NASDAQ Capital Market post-Merger. | |
Merger Agreement [Member] | ||
Subsequent Event [Line Items] | ||
Share Price | $ 2.50 | |
Percentage Of Common Stock Outstanding | 85.00% | |
Cash | $ 419,000 | |
Termination Fee | 250,000 | |
Maximum Reimbursement Expenses | $ 125,000 |