10/08/15 WPCS update – News out this morning in the form of a shareholder update confirming our suspicions of a potential acquisition on the horizon.
News link 10/08/15
Your partner on Broad street
Good morning traders,
We are back ! I mean we are really back to what we do.
This week’s alert is a NASDAQ company that we have been watching for a couple years. I beleive the chart setup and timing is perfect right now.
WPCS Intl Inc. (NASDAQ: WPCS)
Shares outstanding: 2.43M
Shares in the public float: 2.06M
Trailing 12 months revenue: $22.82M
Gross profit: 3.86M
Since 2013 the company has been “trimming the fat” so to speak, by liquidating unprofitable assets and spending more on the areas where they shine. (See recent PR below)
In a recent press release issued on August 3rd, 2015 – Sebastian Giordano, Interim CEO of WPCS, commented, “We believe that the restructuring plan we launched in August 2013 to, amongst other things: (i) eliminate all secured and unsecured notes; (ii) sell, or close, all unprofitable and non-core operations; and (iii) significantly reduce administrative overhead, has successfully been achieved. In addition, we have (i) resolved our recent NASDAQ compliance issues; (ii) raised capital; and (iii) demonstrated our ability to continue as a going concern for the next twelve months. Moreover, we are awaiting the final approval from the Tai’an Bureau of Commerce and Industry to close on the sale of our Chinese joint venture interest. Looking ahead, with a profitable business to build upon and a much-improved balance sheet, we believe that we are well positioned to pursue all viable options to profitably build WPCS, both organically and strategically, the primary goal of which is to deliver increased shareholder value. Management and the board of directors are very pleased to add the WestPark Capital team as another key member of professional advisors to the Company.”
“With its successful restructuring plan now completed, we are pleased to be working with WPCS to chart a course for renewed profitability and enhanced shareholder value,” stated Jonathan Blum, Managing Director of WestPark Capital.
It is hard to say at this point if WestPark Capital will be aiding WPCS in an acquisition, merger or just future financing. However, as you follow the news on the 17th of August they announced the sale of their interest in China operations. Then September 2nd, 2015 WPCS announced the addition of $3M in new contracts for their Suisun City Operations in July and August.
Finally, that brings us to the most recent announcement covering the first quarter 2016 financial results below.
Excerpt Sept. 17th, 2015 press release – Sebastian Giordano, Interim CEO of WPCS, commented, “We are extremely pleased to report that the Company had income from continuing operations of $84,000 for the three months ended July 31, 2015, as our Suisun Operations generated net income of $542,000 in the first quarter.”
Financial Results for the Three Months Ended July 31, 2015
Revenue for the three months ended July 31, 2015 decreased $1,600,000, or 27.0%, to $4,464,000 as compared to $6,064,000 for the same period in 2014.
The Company’s $84,000 income from continuing operations for the three months ended July 31, 2015 was due primarily to an operating loss of $311,000 as well as interest, taxes and other expenses totaling $5,000, which were offset by noncash income from Section 16 settlements of $400,000. This compared to a net operating loss from continuing operations of $2,647,500 for the same period in 2014.
WPCS has recorded the financial results for our divested subsidiaries as discontinued operations. For the three months ended July 31, 2015, WPCS recorded income from discontinued operations of approximately $41,000. Net loss attributable to common shareholders for the three-month period totaled $4,182,000 due primarily from dividends declared and deemed on preferred stock.
“As one multi-year, high revenue, but lower margin project neared completion, we expected topline revenues to be lower this quarter than the same period last year. However, Suisun’s profitability this quarter was significantly bolstered by a robust 22.8% gross profit margin due to more lower revenue, higher margin jobs,” Giordano concluded.
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.
As you can see WPCS has been getting their house in order and may be coming into a time for investors to take a look at the overall picture here as the timing appears right for this tiny 2.06M float company to start heading back towards recent highs in the $3-$3.50/share range.
WPCS chart – http://stockcharts.com/h-sc/ui?s=wpcs
Barchart opinion short term indicators are currently at 60% buy – http://www.barchart.com/opinions/stocks/WPCS
There is a good starting point for our members. We will have more on WPCS soon.
Your partner on Broad Street
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