When WPCS International Incorporated (NASDAQ:WPSC) snapped up bitcoin platform developer BTX Trader last week there was cheering in cyberspace. After all, bitcoin had just made it to the big time and BTX Trader is now an indirectly listed NASDAQ company. But should we be cheering?
The news was certainly good for WPCS shareholders; its stock jumped up quickly. Interim CEO, Sebastian Giordano stated that, “As one of the first publicly traded companies to make an early entrance into the bitcoin space, we believe this transactions consistent with ongoing efforts to provide the Company with an opportunity to deliver improved shareholder value in the future.” Yes, at first glance this would and should bring joy to bitcoiners, expanding the credibility and reputation of bitcoin. BUT the cheering has been short lived since a review of investor message boards and SEC Filings suggest a different story about WPCS and why it snapped up BTX Trader. What is the truth?
WPCS has existed under three previous names since being incorporated in Delaware in the nineties. If you have never heard of Paramount Services Corp., Wowtown Com Inc. or Phoenix Star Ventures Inc., count yourself lucky because that means you did not invest in a company no longer operating. The chat room trolls are pointing at this history and screaming “pump and dump” scammers, but we bitcoiners need to take a more dispassionate look at some SEC filings. (SEC Filings are mandatory for companies trading on NASDAQ) Here are three of interest.
1) On October 7, 2013 the company received a notice of delisting or failure to satisfy a continued listing rule or standard and the SEC demanded to have a meeting with the company. WPCS met with the SEC and kept their listing.
2) The resulting restructuring of debt saw a number of new investors buying into the company at $.39 per share which resulted in a significant dilution of ownership for the previous owners. At the end of business day on December 19 the SEC was notified that there were a total of 5.71 M shares outstanding — a massive dilution for the old shareholders.
3) And the third SEC filing of note is the resignation of the Auditor of WPCS CohnReznick LL on December 20, 2013. An auditor resigning is not a good signal in the world of public companies.
So far the story is that of a challenged company with a confusing past, making a hail Mary in hopes of striking gold for the shareholders. mmm…maybe that is why we are not cheering!