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WPCS International defaults on $3.41 million secured convertible notes
Holders in negotiations with company for forbearance or default waiver
By Devika Patel
Knoxville, Tenn., Oct. 10 - WPCS International Inc. reported that it is in default on its $3.41 million of secured convertible notes in an 8-K filed Thursday with the Securities and Exchange Commission. The notes were issued on Dec. 4, 2012.
The default stems from a clause that requires the company's stock to trade on the Nasdaq. The company was alerted that its stock would be delisted from the Nasdaq exchange as of Oct. 16.
The holders were notified of the default and may force the company to redeem the notes at the greater of 125% of par or the number of shares into which the note is convertible multiplied by 125% of the highest closing price of the stock from Oct. 4 until the notes are repaid in full. None of the noteholders have yet exercised their put right.
If the company is required to repay the notes, it will not have sufficient working capital to repay the debt.
The company and investors are in discussions to negotiate a forbearance or waiver of the default.
Based in Exton, Pa., WPCS provides design-build engineering services for specialty communications systems and wireless infrastructure.
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