WPCS Announces Financial Results for Fiscal Year Ended April 30, 2016

SUISUN, CA--(Marketwired - Jul 29, 2016) - 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 July 28, 2016, it filed its Form 10-K, Annual Report for the fiscal year ended April 30, 2016.

Sebastian Giordano, CEO of WPCS, commented, "Operational results this past year demonstrated that our core business, Suisun City Operations, continues to perform profitably as it generated $1,064,000 in operating income on revenues of $14,555,000."

Financial Results for the Year Ended April 30, 2016

Revenue for the twelve months ended April 30, 2016 decreased $9,863,000, or 40%, to $14,555,000, as compared to $24,418,000, for the same period in 2015. Such decrease was attributable to the completion of one large customer contract during the prior fiscal year.

The Company's loss from continuing operations for the year ended April 30, 2016 was $3,631,000, due primarily from a $4,032,000 operating loss and interest expense of $3,200, which were partially offset by income from a Section 16 settlement of $400,000 and other income of $5,300. This compared to a loss from continuing operations of $6,998,000 for the same period in 2015.

The $4,032,000 loss from operations was comprised of $1,064,000 in operating income from the Suisun City Operations, which was offset by $4,813,000 of corporate overhead expenses, of which $2,439,000 related to non-cash compensation expense recognized on the issuance of employee stock options, a $237,000 loss from the start-up of our Texas Operations and the write-off of the remainder of the previously closed Trenton Operations assets of $47,000.

ABOUT WPCS INTERNATIONAL INCORPORATED

WPCS provides contracting services to the public services, healthcare, energy and corporate enterprise markets in the United States. For more information, 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, and other future conditions. 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,
				2016				2015
ASSETS
Current assets:
	Cash and cash equivalents			$	2,235,597			$	2,364,360
	Accounts receivable, net of allowance of $92,000 at April 30, 2016 and April 30, 2015, respectively				2,886,154				6,494,890
	Costs and estimated earnings in excess of billings on uncompleted contracts				357,210				420,434
	Prepaid expenses and other current assets				66,256				159,769
	Current assets held for sale				-				4,566,251
		Total current assets			5,545,217				14,005,704
Property and equipment, net					237,800				162,986
Other assets					21,162				11,384
Other assets held for sale					-				977,119
Total assets				$	5,804,179			$	15,157,193
LIABILITIES AND EQUITY
Current liabilities:
	Current portion of loans payable			$	53,996			$	39,935
	Accounts payable and accrued expenses				2,071,765				5,414,269
	Billings in excess of costs and estimated earnings on uncompleted contracts				1,358,289				1,346,461
	Other payable to Zurich				-				360,000
	Short-term promissory notes				-				1,703,000
	Dividends payable				-				677,546
	Current liabilities held for sale				-				5,710,807
		Total current liabilities			3,484,050				15,252,018
Loans payable, net of current portion					94,825				44,239
Total liabilities					3,578,875				15,296,257
Commitments and contingencies
Equity (deficit):
WPCS equity (deficit):
	Preferred stock - $0.0001 par value, 5,000,000 shares authorized at April 30, 2016 and April 30, 2015, respectively
		Convertible Series F, 5,268 shares designated, - 0 and 5,268 shares issued and outstanding at April 30, 2016 and April 30, 2015, respectively			-				1,589,933
		Convertible Series F-1, 27,287 shares designated, - 0 and 5,642 shares issued and outstanding at April 30, 2016 and April 30, 2015, respectively			-				1,702,808
		Convertible Series G, 2,088 shares designated, - 0 and 2,088 shares issued and outstanding at April 30, 2016 and April 30, 2015, respectively			-				731,706
		Convertible Series G-1, 4,247 shares designated, - 0 and 3,128 shares issued and outstanding at April 30, 2016 and April 30, 2015, respectively			-				1,096,250
		Convertible Series H, 8,500 shares designated, - 2,638 and 0 shares issued and outstanding at April 30, 2016 and April 30, 2015, respectively; liquidation preference of $406,000			406,262				-
		Convertible Series H-1, 9,488 shares designated, - 8,119 and 0 shares issued and outstanding at April 30, 2016 and April 30, 2015, respectively; liquidation preference of $1,348,000			699,324				-
	Common stock - $0.0001 par value, 100,000,000 shares authorized, 2,691,055 and 982,660 shares issued and outstanding as of April 30, 2016 and April 30, 2015, respectively				269				98
	Additional paid-in capital				85,940,389				70,380,397
	Accumulated deficit				(84,820,940	)			(76,550,894	)
	Accumulated other comprehensive income on foreign currency translation				-				349,723
Total WPCS equity (deficit)					2,225,304				(699,979	)
Noncontrolling interest					-				560,915
Total equity (deficit)					2,225,304				(139,064	)
Total liabilities and equity				$	5,804,179			$	15,157,193

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,
			2016				2015
Revenue			$	14,555,102			$	24,417,686
Costs and expenses:
	Cost of revenue			11,570,364				20,559,427
	Selling, general and administrative expenses			6,951,637				4,867,056
	Depreciation and amortization			64,738				60,207
				18,586,739				25,486,690
Operating loss				(4,031,637	)			(1,069,004)
Other income (expense):
	Interest expense			(3,196	)			(2,838,739)
	Inducement expense			-				(5,492,842)
	Income from section 16 settlement			400,000				1,401,516
	Gain on forgiveness of other payable to Zurich			-				883,757
	Other income			5,284				187,209
Loss from continuing operations before income tax provision				(3,629,549	)			(6,928,103)
Income tax provision				1,706				69,679
Loss from continuing operations				(3,631,255	)			(6,997,782)
Discontinued operations:
	Income (loss) from discontinued operations			27,261				(2,550,113)
	Gain from disposal			837,720				798,896
	Gain from disposal of BTX			-				19,700
	Loss from disposal of Seattle Operations			-				(374,932)
	Income (loss) from discontinued operations, net of tax			864,981				(2,106,449)
Consolidated net loss				(2,766,274	)			(9,104,231)
Net income (loss) attributable to noncontrolling interest				16,505				(284,210)
Net loss attributable to WPCS				(2,782,779	)			(8,820,021)
Dividends declared on preferred stock				(4,742,768	)			(2,508,518)
Deemed dividend on convertible preferred stock, due to beneficial conversion feature				(744,499	)			-
Net loss attributable to WPCS common shareholders			$	(8,270,046	)		$	(11,328,539)
Basic and diluted net loss attributable to WPCS common shareholders:
	Loss from continuing operations		$	(3.98	)		$	(14.13)
	Income (loss) from discontinued operations		$	0.00			$	(3.37)
	Gain from disposal		$	0.37			$	0.66
	Basic and diluted net income from discontinued operations		$	0.37			$	(2.71)
	Basic and diluted net loss per common share attributable to WPCS		$	(3.61	)		$	(16.84)
Basic and diluted weighted average number of common shares outstanding				2,290,050				672,723

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,
			2016				2015
Operating activities:
	Net loss from operations		$	(3,631,255	)		$	(6,997,782	)
	Consolidated net income (loss) from discontinued operations			864,981				(2,106,449	)
Adjustments to reconcile consolidated net loss to net cash provided by operating activities:
	Depreciation and amortization			64,738				60,207
	Amortization of notes discount			-				853,417
	Inducement expenses			-				5,492,842
	Shares based compensation			2,506,239				170,562
	Interest expense related to make-whole amount			-				1,889,716
	Gain on sale of Pride			-				(798,897	)
	Gain on sale of China operations			(837,720	)			-
	Gain on sale of BTX			-				(19,700	)
	Loss on sale of Seattle Operations			-				374,932
	Income on section 16 settlement			(400,000	)			(1,401,516	)
	Cash received on section 16 settlement			-				650,000
	Gain on forgiveness of other payable to Zurich			-				(883,757	)
Changes in operating assets and liabilities:
	Accounts receivable			3,608,736				(1,879,137	)
	Costs and estimated earnings in excess of billings on uncompleted contracts			63,224				10,914
	Current assets held for sale			(3,853,621	)			928,403
	Prepaid expenses and other current assets			93,513				(7,706	)
	Other assets			(9,778	)			37,392
	Other assets held for sale			(20,523	)			1,085,405
	Income taxes payable			-				(2,366	)
	Accounts payable and accrued expenses			(3,342,504	)			1,583,312
	Current liabilities held for sale			2,200,030				742,106
	Accrued severance expense			-				(550,205	)
	Billings in excess of costs and estimated earnings on uncompleted contracts			11,828				(102,102	)
Net cash used in operating activities				(2,682,112	)			(870,409	)
Investing activities:
	Cash received on sale of Seattle			-				1,561,000
	Acquisition of property and equipment			(139,552	)			(46,912	)
	Addition on acquisition of BTX capitalized software			-				(2,279	)
	Payment for sale of BTX			-				(59,097	)
	Proceeds from sale of China operations, net of acquisition cost			1,325,744				-
Net cash provided by investing activities				1,186,192				1,452,712
Financing activities:
	Proceeds from issuance of Series H-1 preferred stock and warrants			1,575,000				-
	Borrowings under loan payable obligations			115,753				-
	Repayment under loan payable obligations			(51,106	)			(4,043	)
	Repayments under other payable to Zurich			(360,000	)			(290,000	)
	Repayments of short term promissory notes			(4,000	)			-
	Dividends paid on preferred stock			-				(146,520	)
Net cash provided by (used in) financing activities				1,275,647				(440,563	)
Effect of exchange rate changes on cash				91,510				45,550
Net (decrease) increase in cash and cash equivalents				(128,763	)			187,290
Cash and cash equivalents, beginning of the year				2,364,360				2,177,070
Cash and cash equivalents, end of the year			$	2,235,597			$	2,364,360

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,
			2016			2015
Schedule of non-cash investing and financing activities:
	Declaration on preferred dividend payable		$	4,742,768		$	2,508,518
	Conversion of senior secured convertible note and related make-whole amount to Series F-1 preferred stock Series G-1 preferred stock		$	-		$	973,180
	Conversion of senior secured convertible note and related make-whole amount to Series F preferred stock Series G preferred stock		$	-		$	451,141
	Conversion of dividends payable related to make-whole amount to common stock		$	4,457,356		$	1,622,954
	Conversion of dividends payable related to Series F-1 preferred stock		$	624,977		$	133,532
	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 Preferred E to short term promissory note		$	-		$	2,438,000
	Conversion of Series F and F-1 preferred stock through the issuance of common stock		$	3,292,741		$	1,669,915
	Conversion of Series G and G-1 preferred stock through the issuance of common stock		$	1,827,956		$	110,035
	Conversion of Series H preferred stock through the issuance of common stock		$	892,738		$	-
	Conversion of Series H-1 preferred stock through the issuance of common stock		$	75,000		$	-
	Settlement of debt, make-whole interest and other liabilities on sale of BTX		$	-		$	1,962,000
	Settlement of capitalized software and other assets on sale of BTX		$	-		$	1,883,000
	Settlement of severance obligation and sale of Pride		$	-		$	970,000

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