WPCS Announces Financial Results for Fiscal Year Ended April 30, 2017

SUISUN, CA--(Marketwired - Jul 21, 2017) - WPCS International Incorporated (NASDAQ: WPCS), a full-service low-voltage solutions provider in the business of developing, installing and servicing integrated structured cabling, audio-visual and security systems, announced that today it filed its Annual Report on Form 10-K, for the fiscal year ended April 30, 2017.

Sebastian Giordano, CEO of WPCS, commented, "Operational results this past year demonstrated that our sole business, Suisun City Operations, continues to perform profitably as it generated $1,064,000 in operating income on revenues of approximately $15,731,000."

Financial Results for the Year Ended April 30, 2017

Revenue for the twelve months ended April 30, 2017 increased by approximately $2,182,000, or 15%, to approximately $16,737,000, as compared to approximately $14,555,000, for the same period in 2016. Such increase was due primarily to revenue increases in our: (i) Suisun City Operations of approximately $1,177,000, and (ii) Texas Operations of approximately $1,005,000. Notwithstanding the foregoing, we do not anticipate any further revenues from the Texas Operations since it was closed in the fourth quarter of 2017.

The Company's loss from continuing operations for the year ended April 30, 2017 was approximately $1,219,000, due primarily to an approximate $2,545,000 operating loss, interest expense of approximately $7,000 and income tax provision of approximately $3,000, which were partially offset by income from various settlements totaling approximately $1,192,000 and other income of approximately $143,000. This compared to a loss from continuing operations of approximately $3,631,000 for the same period in 2016. Meanwhile, the net loss attribute to WPCS common shareholders for the year ended April 30, 2017 was approximately $2,256,000, or $0.76 per share, as compared to a loss of approximately $8,270,000, or $3.61 per share, for the same period in 2016.

The $2,545,000 loss from operations was comprised primarily of approximately $1,043,000 in operating income from Suisun City Operations and which was offset by approximately $2,602,000 of corporate overhead expenses, of which approximately $580,000 related to non-cash compensation expense recognized on the issuance of employee stock options, and a loss from our Texas Operations of approximately $986,000. This compared to a net loss from operations of approximately $4,032,000 for the same period in 2016.

ABOUT WPCS INTERNATIONAL INCORPORATED

WPCS is a full-service, low-voltage solutions provider, installing and servicing integrated structured cabling, audio-visual and security systems for public services, healthcare, energy and corporate enterprise markets in the United States. The Company delivers end-to-end solutions, superior project management and best-in-class products and technology. For more information about WPCS, please visit www.wpcs.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including, but not limited to, statements with respect to the Company's future growth opportunities and strategic plan. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, other future conditions and the risk factors detailed from time to time in the Company's periodic filings with the Securities and Exchange Commission, including without limitation, the Company's Annual Report on Form 10-K for the year ended April 30, 2017. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
				April 30,				April 30,
				2017				2016
ASSETS
Current assets:
	Cash and cash equivalents			$	1,659,318			$	2,235,597
	Restricted cash				500,026				-
	Accounts receivable, net of allowance of $247,000 and $92,000 at April 30, 2017 and 2016, respectively				4,199,674				2,886,154
	Costs and estimated earnings in excess of billings on uncompleted contracts				410,826				357,210
	Prepaid expenses and other current assets				41,135				66,256
		Total current assets			6,810,979				5,545,217
Property and equipment, net					322,643				237,800
Other assets					11,484				21,162
Total assets				$	7,145,106			$	5,804,179
LIABILITIES AND EQUITY
Current liabilities:
	Current portion of loans payable			$	52,946			$	53,996
	Accounts payable and accrued expenses				1,790,256				2,071,765
	Billings in excess of costs and estimated earnings on uncompleted contracts				2,105,797				1,358,289
		Total current liabilities			3,948,999				3,484,050
Loans payable, net of current portion					124,559				94,825
Total liabilities					4,073,558				3,578,875
Commitments and contingencies
Stockholders' equity
	Preferred stock - $0.0001 par value, 5,000,000 shares authorized at April 30, 2017 and 2016, respectively
		Convertible Series H, 8,500 shares designated - 8 and 2,638 shares issued and outstanding at April 30, 2017 and 2016, respectively; liquidation preference of $1,000			1,242				406,262
		Convertible Series H-1, 9,488 shares designated - 4,289 and 8,119 shares issued and outstanding at April 30, 2017 and 2016, respectively; liquidation preference of $712,000			437,530				699,324
		Convertible Series H-2, 3,500 shares designated- 3,305 and 0 shares issued and outstanding at April 30, 2017 and 2016, respectively; liquidation preference of $400,000			230,721				-
		Convertible Series H-3, 8,461 shares designated - 7,017 and 0 shares issued and outstanding at April 30, 2017 and 2016, respectively; liquidation preference of $968,000			475,185				-
	Common stock - $0.0001 par value, 100,000,000 shares authorized, 3,352,159 and 2,691,055 shares issued and outstanding as of April 30, 2017 and 2016, respectively				335				269
	Additional paid-in capital				89,003,669				85,940,389
	Accumulated deficit				(87,077,134	)			(84,820,940	)
Total stockholders' equity					3,071,548				2,225,304
Total liabilities and stockholders' equity				$	7,145,106			$	5,804,179

The accompanying notes are an integral part of these consolidated financial statements.

WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
			For the years ended
			April 30,
			2017				2016
Revenue			$	16,736,991			$	14,555,102
Costs and expenses:
	Cost of revenue			12,893,901				11,570,364
	Selling, general and administrative expenses			6,272,138				6,951,637
	Depreciation and amortization			115,454				64,738
				19,281,493				18,586,739
Operating loss				(2,544,502	)			(4,031,637	)
Other income (expense):
	Interest expense			(6,621	)			(3,196	)
	Income from Section 16 settlement			-				400,000
	Income from Arbitration settlement			1,192,246				-
	Other income			143,178				5,284
Loss from continuing operations before income tax provision				(1,215,699	)			(3,629,549	)
Income tax provision				3,130				1,706
Loss from continuing operations				(1,218,829	)			(3,631,255	)
Discontinued operations:
	Income from discontinued operations			-				27,261
	Gain from disposal			-				837,720
Consolidated net loss				(1,218,829	)			(2,766,274	)
Net income attributable to noncontrolling interest				-				16,505
Net loss attributable to WPCS				(1,218,829	)			(2,782,779	)
Dividends declared on preferred stock				-				(4,742,768	)
Deemed dividend on convertible preferred stock, due to beneficial conversion feature				(1,037,365	)			(744,499	)
Net loss attributable to WPCS common shareholders			$	(2,256,194	)		$	(8,270,046	)
Basic and diluted loss from continuing operations per common share			$	(0.76	)		$	(3.98	)
Gain from disposal				-				0.37
Basic and diluted net loss per common share			$	(0.76	)		$	(3.61	)
Basic and diluted weighted average number of common shares outstanding				2,967,984				2,290,050

The accompanying notes are an integral part of these consolidated financial statements.

WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
				For the years ended
				April 30,
				2017				2016
Operating activities:
	Net loss from continuing operations			$	(1,218,829	)		$	(3,631,255	)
	Consolidated net income from discontinued operations				-				864,981
Adjustments to reconcile net loss to net cash provided by operating activities:
	Depreciation and amortization				115,454				64,738
	Shares based compensation				602,431				2,506,239
	Gain on sale of China Operations				-				(837,720	)
	Income on Section 16 settlement				-				(400,000	)
	Changes in operating assets and liabilities:
		Accounts receivable			(1,313,520	)			3,608,736
		Costs and estimated earnings in excess of billings on uncompleted contracts			(53,616	)			63,224
		Current assets held for sale			-				(3,853,621	)
		Prepaid expenses and other current assets			25,121				93,513
		Other assets			9,678				4,222
		Other assets held for sale			-				(34,523	)
		Accounts payable and accrued expenses			(281,509	)			(3,342,504	)
		Current liabilities held for sale			-				2,200,030
		Billings in excess of costs and estimated earnings on uncompleted contracts			747,508				11,828
Net cash used in operating activities					(1,367,282	)			(2,682,112	)
Investing activities:
	Acquisition of property and equipment				(77,272	)			(139,552	)
	Proceeds from sale of China Operations, net of acquisition cost				-				1,325,744
Net cash (used in) provided by investing activities					(77,272	)			1,186,192
Financing activities:
	Proceeds from issuance of Series H-1 preferred stock and warrants				-				1,575,000
	Proceeds from issuance of Series H-2 preferred stock and warrants, net of offering costs				429,631				-
	Proceeds from issuance of Series H-3 preferred stock and warrants, net of offering costs				1,033,011				-
	Borrowings under loan payable obligations				-				115,753
	Repayment under loan payable obligations				(94,341	)			(51,106	)
	Repayments under other payable to Zurich				-				(360,000	)
	Repayments of short term convertible note				-				(4,000	)
Net cash provided by financing activities					1,368,301				1,275,647
Effect of exchange rate changes on cash					-				91,510
Net decrease in cash, cash equivalents and restricted cash					(76,253	)			(128,763	)
Cash, cash equivalents and restricted cash beginning of the year					2,235,597				2,364,360
Cash, cash equivalents and restricted cash end of the year				$	2,159,344			$	2,235,597

The accompanying notes are an integral part of these consolidated financial statements.

WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
				For the years ended
				April 30,
				2017				2016
Schedule of non-cash investing and financing activities:
	Automobile loan payable obligations			$	123,025			$	-
	Declaration on preferred dividend payable			$	-			$	4,742,768
	Issuance of warrants with Series H-2 preferred stock			$	231,248			$	-
	Beneficial conversion feature of Series H-2 convertible preferred stock			$	183,284			$	-
	Deemed dividends related to immediate accretion of beneficial conversion feature of Series H-2 convertible preferred stock			$	183,284			$	-
	Issuance of warrants with Series H-3 preferred stock			$	557,826			$	-
	Beneficial conversion feature of Series H-3 convertible preferred stock			$	476,375			$	-
	Deemed dividends related to immediate accretion of beneficial conversion feature of Series H-3 convertible preferred stock			$	476,375			$	-
	Conversion of dividends payable related to make-whole amount to common stock			$	-			$	4,457,356
	Conversion of dividends payable related to Series F-1 preferred stock			$	-			$	624,977
	Conversion of dividends payable related to Series G-1 preferred stock			$	-			$	337,981
	Conversion of short term convertible note to Series H preferred stock			$	-			$	1,299,000
	Conversion of Series F and F-1 preferred stock through the issuance of common stock			$	-			$	3,292,741
	Conversion of Series G and G-1 preferred stock through the issuance of common stock			$	-			$	1,827,927
	Conversion of Series H preferred stock through the issuance of common stock			$	405,020			$	892,738
	Conversion of Series H-1 preferred stock through the issuance of common stock			$	639,500			$	75,000
	Deemed dividend on conversion of Series H-1 convertible preferred stock to common stock			$	377,706			$	-

The accompanying notes are an integral part of these consolidated financial statements.