WPCS Announces Financial Results for Fiscal 2018 First Quarter

SUISUN, CA--(Marketwired - Sep 13, 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 today announced that on September 12, 2017, it filed its Quarterly Report on Form 10-Q, for the three months ended July 31, 2017.

Sebastian Giordano, CEO of WPCS, commented, "We are pleased to report that for the three months ended July 31, 2017 our Suisun City Operations generated net income of $184,000."

Financial Results for the Three Months Ended July 31, 2017

Revenue for the three months ended July 31, 2017 increased $107,000, or 3.1%, to $3,523,000, as compared to $3,416,000 for same prior year period due to an approximately $380,000 increase in revenue in Suisun City Operations offset by an approximately $273,000 decrease in revenue from our Texas Operations. We do not anticipate any further revenues from the Texas Operations since it was closed in the fourth quarter of fiscal year 2017.

The Company had a net loss from operations of $440,000 for the three months ended July 31, 2017 due primarily to an operating loss of $446,000 as well as interest expense of $2,000, which were partially offset by income of $8,000 from a legal settlement. This compared to net income from operations of $557,000 for the same prior year period, which was primarily due to the receipt of proceeds from a one-time legal settlement of $1,150,000.

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.

On September 6, 2017, WPCS announced the signing of a definitive merger agreement with DropCar, Inc. ("DropCar") a privately-held company that provides app-based automotive logistics and concierge services for both consumers and the automotive industry. Please see WPCS's Current Report on Form 8-K filed with the Securities and Exchange Commission on September 6, 2017 for more information on the proposed merger.

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
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
			July 31,				April 30,
			2017				2017
ASSETS
Current assets:
	Cash and cash equivalents		$	1,880,549			$	1,659,318
	Restricted cash			500,100				500,026
	Accounts receivable, net of allowance of $247,000 at July 31, 2017 and April 30, 2017, respectively			4,002,248				4,199,674
	Costs and estimated earnings in excess of billings on uncompleted contracts			334,956				410,826
	Prepaid expenses and other current assets			50,899				41,135
		Total current assets		6,768,752				6,810,979
Property and equipment, net				296,675				322,643
Other assets				11,484				11,484
Total assets			$	7,076,911			$	7,145,106
LIABILITIES AND EQUITY
Current liabilities:
	Current portion of loans payable		$	52,271			$	52,946
	Accounts payable and accrued expenses			1,369,097				1,790,256
	Billings in excess of costs and estimated earnings on uncompleted contracts			2,911,882				2,105,797
		Total current liabilities		4,333,250				3,948,999
Loans payable, net of current portion				112,191				124,559
Total liabilities				4,445,441				4,073,558
Commitments and contingencies
Stockholders' equity
	Preferred stock - $0.0001 par value, 5,000,000 shares authorized at July 31, 2017 and April 30, 2017, respectively
		Convertible Series H, 8,500 shares designated- 8 shares issued and outstanding at July 31, 2017 and April 30, 2017, respectively; liquidation preference of $1,000		1,242				1,242
		Convertible Series H-1, 9,488 shares designated - 4,289 shares issued and outstanding at July 31, 2017 and April 30, 2017, respectively; liquidation preference of $712,000		437,530				437,530
		Convertible Series H-2, 3,500 shares designated - 3,305 shares issued and outstanding at July 31, 2017 and April 30, 2017, respectively; liquidation preference of $400,000		230,721				230,721
		Convertible Series H-3, 9,500 shares designated - 7,017 shares issued and outstanding at July 31, 2017 and April 30, 2017, respectively; liquidation preference of $968,000		475,185				475,185
	Common stock - $0.0001 par value, 100,000,000 shares authorized, 3,352,159 shares issued and outstanding as of July 31, 2017 and April 30, 2017, respectively			335				335
	Additional paid-in capital			89,003,669				89,003,669
	Accumulated deficit			(87,517,212	)			(87,077,134	)
Total stockholders' equity				2,631,470				3,071,548
Total liabilities and equity			$	7,076,911			$	7,145,106

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

WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
		For the three months ended
		July 31,
		2017				2016
Revenue		$	3,523,347			$	3,416,453
Costs and expenses:
	Cost of revenue		2,754,550				2,635,508
	Selling, general and administrative expenses		1,184,501				1,352,986
	Depreciation and amortization		30,073				20,666
			3,969,124				4,009,160
Operating loss			(445,777	)			(592,707	)
Other income (expense):
	Interest expense		(2,051	)			(1,981	)
	Income from arbitration settlements		7,750				1,150,000
	Other income		-				4,487
(Loss) income from operations before income tax provision			(440,078	)			559,799
Income tax provision			-				2,618
(Loss) income from operations			(440,078	)			557,181
Net (loss) income		$	(440,078	)		$	557,181
Basic (loss) income per common share		$	(0.13	)		$	0.21
Diluted (loss) income per common share		$	(0.13	)		$	0.14
Weighted average shares outstanding - basic			3,352,159				2,701,404
Weighted average shares outstanding - diluted			3,352,159				3,937,628

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

WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
				For the three months ended
				July 31,
				2017				2016
Operating activities:
	Net (loss) income			$	(440,078	)		$	557,181
Adjustments to reconcile consolidated net loss to net cash provided by (used in) operating activities:
	Depreciation and amortization				30,073				20,666
	Shares based compensation				-				22,501
	Changes in operating assets and liabilities:
		Accounts receivable			197,426				(1,441,964	)
		Costs and estimated earnings in excess of billings on uncompleted contracts			75,870				(79,975	)
		Prepaid expenses and other current assets			(9,764	)			(57,721	)
		Other assets			-				(3,778	)
		Accounts payable and accrued expenses			(421,159	)			204,952
		Billings in excess of costs and estimated earnings on uncompleted contracts			806,085				543,006
Net cash provided by (used in) operating activities					238,453				(235,132	)
Investing activities:
	Acquisition of property and equipment				(4,105	)			(30,803	)
Net cash used in investing activities					(4,105	)			(30,803	)
Financing activities:
	Repayment under loan payable obligations				(13,043	)			(29,762	)
Net cash used in financing activities					(13,043	)			(29,762	)
Net change in cash, cash equivalents and restricted cash					221,305				(295,697	)
Cash, cash equivalents and restricted cash beginning of the year					2,159,344				2,235,597
Cash, cash equivalents and restricted cash end of the year				$	2,380,649			$	1,939,900

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

WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
		For the three months ended
		July 31,
		2017			2016
Schedule of non-cash investing and financing activities:
	Automobile financing	$	-		$	50,622

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

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