Engineering contractor WPCS International Inc. (Nasdaq: WPCS) is selling its 60 percent stake in Tai'an AGS Pipeline Construction Co. Ltd. to Halcyon Coast Investment (Canada) Ltd.
The deal, which is part of the company's restructuring plan, will bring in $1.5 million and should close by Sept. 30, according to a June 8 filing with the U.S. Securities and Exchange Commission.
WPCS, headquartered in Exton, Pennsylvania, provides services to the public services, health care, energy and corporate enterprise markets in the U.S. and China.
On June 1, WPCS received a notice from the Nasdaq Exchange that it didn't meet the minimum stockholders' equity requirement to stay listed. The company plans to seek listing extension and request a hearing, it says in an SEC filing. WPCS has had trouble with Nasdaq listing requirements before it had just regained compliance with the exchange's $1 per share listing requirement in early May.
Aside from the exchange listing struggles, a lack of money and operating losses have affected the business. The company raised substantial doubt about its ability to continue as a going concern, or without the threat of liquidation, because of a need for cash, in a quarterly SEC filing on March 23.
Before that, WPCS had racked up losses. For the nine months ended Jan. 31, the business had a loss from operations of $7.6 million. The business has been facing problems for a while. In 2014, it defaulted on its notes. But it was able to enter into a settlement earlier this year, in February, for a $1.5 million debt.
Despite problems, WPCS has seen a slight revenue increase of 1.5 percent, equal to $94,000, for the three months ended Jan. 31. In the company's previous annual filing on July 30, WPCS says that had an aggressive plan for stabilizing operations over the next year.
For the previous edition of Turnaround Tuesday, see Troubled Drug Developer Cytori Pays Debt with New Loan. For more on struggling companies, check out Mergers & Acquisitions Distressed Company Watch List.