WPCS Announces Financial Results for the Three Months and Year Ended April 30, 2014

WPCS Announces Financial Results for the Three Months and Year Ended April 30, 
2014 
EXTON, PA -- (Marketwired) -- 07/30/14 --  WPCS International
Incorporated (NASDAQ: WPCS), which specializes in contracting
services for communications infrastructure and the development of a
digital currency trading platform, today announced its fiscal three
month and full year 2014 financial results for the period ended April
30, 2014. 
Sebastian Giordano, Interim CEO of WPCS, commented, "We are pleased
with our revenue growth for the three months and full year period
ended April 30, 2014. Accounting for the strategic reduction of our
unprofitable Trenton Operations during both periods, revenue on a
period-over-period basis for the three month period increased
approximately 47% and for the full year approximately 34%. Also worth
noting is the improvement to our balance sheet. As of April 30, 2014
we had $2.2 million in cash and shareholders' equity of $6.0 million,
an improvement from $1.4 million in cash and a deficit of $900,000 at
April 30, 2013. We remain focused on strengthening our balance sheet
and continuing to implement our strategic plan to build our
profitable assets while divesting others such as Seattle, Australia
and China that we anticipate will generate working capital and
eliminate certain costs." 
Mr. Giordano continued, "Since acquiring BTX Trader in December 2013,
we continue to enhance the technology and launch new products.
Initially, we established a brand and a dedicated trader user base
with limited marketing. Now, with the launch of our new product,
Celery, our new web-based product committed to putting digital
currency in the hands of ordinary consumers, we are excited about the
additional market opportunity afforded us by being able to leverage
the BTX Trader platform." 
Company and Financial Highlights: 


 
--  Since acquiring the BTX Trader software platform in December 2013, the
    online platform has grown to 5,000 users and over 1,500 unique
    visitors per month;
--  BTX Trader has launched Celery (www.gocelery.com), a new product
    providing consumers with the simplest and fastest way to buy their
    first digital currency using direct bank transfers, initially focused
    on Bitcoin and Dogecoin;
--  BTX Trader has engaged the services of Clarity PR for public relations
    and social media marketing;
--  As previously announced, for the period January 1, 2014 through May
    31, 2014, Suisun City was awarded approximately $5.5 million in new
    contracts as compared to $2.3 million for the same period
    year-over-year, an increase of 139%;
--  For the 2014 fiscal fourth quarter, revenue increased 25.7%. Taking
    into account the strategic reduction of the Company's Trenton
    operations, revenue for the quarter and full year ended April 30, 2014
    increased 47.2% and 34.4% respectively;
--  Reported cash and cash equivalents of $2.2 million as of April 30,
    2014;
--  Increased shareholders' equity by approximately $6.9 million from a
    deficit of $900,000 at April 30, 2013 to equity of $6.0 million at
    April 30, 2014; and
--  Entered into definitive agreements to divest the Australia and Seattle
    Operations.

  
Financial Results for the Three Month Period Ended April 30, 2014
 For
the fourth quarter of fiscal year 2014 ended April 30, 2014, WPCS
reported revenue of approximately $6.2 million, an increase of 25.7%
compared to revenue of $4.9 million for the same period in the prior
year. This increase was partially offset by a $721,000 decrease in
revenue in our Trenton Operations due to the reduction of this
unprofitable operation, which commenced in September 2013. Excluding
the decrease for the Trenton Operations, the effective increase in
revenue from the remaining Suisun City and China operations was
approximately 47.2%.  
For the fourth quarter ended April 30, 2014, WPCS reported a net loss
to common shareholders of approximately $1.2 million or $0.09 per
share, which included: $301,000 of severance expense recorded per the
separation agreement with CFO Joseph Heater; a $567,000 loss from
discontinued operations for the Australia, Seattle, Lakewood and
Hartford Operations; operating losses of $95,000 from the initial
start-up of the Bitcoin trading segment; and operating losses of
$64,000 from the wind-down of the Trenton Operation. The Company had
a net loss of $6.2 million, or $6.23 per share, for the same period
in fiscal 2013. 
Financial Results for the Year Ended April 30, 2014
 Revenue for the
year ended April 30, 2014 was approximately $21.3 million, as
compared to $24.8 million for the year ended April 30, 2013. This
decrease in revenue was due primarily to an $8.8 million decrease in
revenue in our Trenton Operations due to the strategic reduction of
this unprofitable operation that commenced in September 2013.
Excluding the decrease for the Trenton Operations, the effective
increase in revenue from the remaining Suisun City and China
Operations was approximately 34.4%. 
The net loss attributable to common shareholders was approximately
$11.2 million, or $1.99 per share, for the year ended April 30, 2014,
of which approximately $9.2 million was attributable to: one-time
charges of $1.8 million related to severance expense recorded per the
separation agreements with former CEO Andrew Hidalgo and CFO Joseph
Heater; $4.3 million of non-cash interest expense for the
amortization of debt discount and expenses related to the conversion
of senior secured convertible notes (the "Notes") and the amendments
to the Notes and warrants (the "Warrants") (the "Amendment and Note
Amendment"); $1.3 million related to the loss on extinguishment of
the Notes; $834,000 related to the final change in fair value of the
derivative liabilities associated with the Notes and Warrants prior
to the Amendment and Note Amendment, which enabled us to reclassify
the former derivative liabilities to stockholders' equity; a net loss
of approximately $71,000 from discontinued operations for the
Australia, Seattle, Lakewood and Hartford Operations; approximately
$443,000 in operating losses from the initial start-up of the Bitcoin
trading segment; and approximately $438,000 of operating losses from
the wind-down of the Trenton Operation. Such net loss for the year
ended April 30, 2014, compares to a net loss attributable to common
shareholders of $6.9 million, or $6.95 per diluted share, for the
year ended April 30, 2013. 
Shareholder Update Conference Call
 Management will host a
shareholder update conference call in August 2014. Details, including
dial-in and webcast information, will be provided in an upcoming news
release prior to the call. 
About WPCS International Incorporated
 WPCS operates in two business
segments including: (1) providing communications infrastructure
contracting services to the public services, healthcare, energy and
corporate enterprise markets worldwide; and (2) developing a digital
currency trading platform. For more information, please visit
www.wpcs.com, www.btxtrader.com and www.gocelery.com. 
Statements about the company's future expectations, including future
revenue and earnings and all other statements in this press release,
other than historical facts, are "forward looking" statements and are
made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements
involve risks and uncertainties and are subject to change at any
time. The company's actual results could differ materially from
expected results. In reflecting subsequent events or circumstances,
the company undertakes no obligation to update forward-looking
statements. 


 
                                                                            
                                                                            
              WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES              
                    CONSOLIDATED STATEMENTS OF OPERATIONS                   
                                                                            
                            Three Months Ended            Years Ended       
                                April 30,                  April 30,        
                            2014         2013          2014         2013    
                        ------------ ------------ ------------- ------------
                                       (Note 1)      (Note 1)     (Note 1)  
REVENUE                   $6,238,656   $4,964,300   $21,264,288  $24,774,876
                        ------------ ------------ ------------- ------------
                                                                            
COSTS AND EXPENSES:                                                         
  Cost of revenue          5,185,235    3,096,545    16,744,720   17,556,832
  Selling, general and                                                      
   administrative                                                           
   expenses                1,389,437    1,947,699     5,988,117    6,574,237
  Severance expense          301,455            -     1,775,732            -
  Depreciation and                                                          
   amortization              174,663      231,340       752,109      916,449
                        ------------ ------------ ------------- ------------
                                                                            
                           7,050,790    5,275,584    25,260,678   25,047,518
                        ------------ ------------ ------------- ------------
                                                                            
OPERATING LOSS             (812,134)    (311,284)   (3,996,390)    (272,642)
                                                                            
OTHER EXPENSE (INCOME):                                                     
  Interest expense           123,803      785,116     5,042,189    2,091,771
  Loss on                                                                   
   extinguishment of                                                        
   Notes                           -            -     1,299,304            -
  Change in fair value                                                      
   of derivative                                                            
   liabilities                     -    2,000,674       833,750    2,703,248
  Interest income           (11,595)            -      (11,595)            -
                        ------------ ------------ ------------- ------------
                                                                            
Loss from continuing                                                        
 operations before                                                          
 income tax (benefit)                                                       
 provision                 (924,342)  (3,097,074)  (11,160,038)  (5,067,661)
                                                                            
Income tax (benefit)                                                        
 provision                 (305,455)      296,046     (182,942)      216,314
                                                                            
                        ------------ ------------ ------------- ------------
LOSS FROM CONTINUING                                                        
 OPERATIONS                (618,887)  (3,393,120)  (10,977,096)  (5,283,975)
                        ------------ ------------ ------------- ------------
                                                                            
Discontinued                                                                
 operations:                                                                
  Income (loss) from                                                        
   discontinued                                                             
   operations, net of                                                       
   tax benefit             (566,645)  (2,711,187)        33,890  (3,287,932)
  (Loss) gain from                                                          
   disposal                        -     (69,953)     (104,446)    1,756,586
                                                                            
                        ------------ ------------ ------------- ------------
  Loss from                                                                 
   discontinued                                                             
   operations, net of                                                       
   tax                     (566,645)  (2,781,140)      (70,556)  (1,531,346)
                        ------------ ------------ ------------- ------------
                                                                            
CONSOLIDATED NET LOSS    (1,185,532)  (6,174,260)  (11,047,652)  (6,815,321)
                                                                            
Net (loss) income                                                           
 attributable to                                                            
 noncontrolling                                                             
 interest                   (41,586)       12,484        11,287       95,406
                        ------------ ------------ ------------- ------------
                                                                            
NET LOSS ATTRIBUTABLE                                                       
 TO WPCS                 (1,143,946) ($6,186,744)  (11,058,939)  (6,910,727)
                                                                            
Dividend declared on                                                        
 preferred stock            (72,034)            -     (109,027)            -
                        ------------ ------------ ------------- ------------
                                                                            
NET LOSS ATTRIBUTABLE                                                       
 TO WPCS COMMON                                                             
 SHAREHOLDERS           ($1,215,980) ($6,186,744) ($11,167,966) ($6,910,727)
                        ============ ============ ============= ============
                                                                            
Basic and diluted net                                                       
 loss attributable to                                                       
 WPCS common                                                                
 shareholders:                                                              
  Loss from continuing                                                      
   operations                ($0.05)      ($3.43)       ($1.98)      ($5.41)
                        ------------ ------------ ------------- ------------
  (Loss) income from                                                        
   discontinued                                                             
   operations                ($0.04)      ($2.73)         $0.01      ($3.31)
  (Loss) gain from                                                          
   disposal                      $ -      ($0.07)       ($0.02)        $1.77
                        ------------ ------------ ------------- ------------
  Basic and diluted net                                                     
   loss from                                                                
   discontinued                                                             
   operations                ($0.04)      ($2.80)       ($0.01)      ($1.54)
                        ------------ ------------ ------------- ------------
  Basic and diluted net                                                     
   loss per common                                                          
   share attributable                                                       
   to WPCS                   ($0.09)      ($6.23)       ($1.99)      ($6.95)
                        ============ ============ ============= ============
                                                                            
Basic and diluted                                                           
 weighted average                                                           
 number of common                                                           
 shares outstanding       13,913,164      994,187     5,597,821      994,187
                        ============ ============ ============= ============
                                                                            
                                                                            
                                                                            
                                                                            
              WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES              
                         CONSOLIDATED BALANCE SHEETS                        
                                                                            
                                                  April 30,      April 30,  
                    ASSETS                          2014           2013     
                                               -------------- --------------
                                                                 (Note 1)   
CURRENT ASSETS:                                                             
                                                                            
  Cash and cash equivalents                    $    2,177,070 $    1,410,223
  Restricted cash                                           -      1,869,178
  Accounts receivable, net of allowance for                                 
   doubtful accounts of $1,033,786 and                                      
   $957,918 respectively                            8,614,396      4,139,768
  Costs and estimated earnings in excess of                                 
   billings on uncompleted contracts                  431,348        329,141
  Deferred contract costs                           1,166,734      1,597,894
  Prepaid expenses and other current assets           217,235         96,903
  Current assets held for sale                      4,001,812      5,152,809
                                               -------------- --------------
    Total current assets                           16,608,595     14,595,916
                                                                            
PROPERTY AND EQUIPMENT, net                         1,780,520      2,526,638
                                                                            
CAPITALIZED SOFTWARE COSTS                          3,207,305              -
                                                                            
OTHER ASSETS                                           52,376        214,259
                                                                            
OTHER ASSETS HELD FOR SALE                            372,930        808,153
                                               -------------- --------------
                                                                            
    Total assets                               $   22,021,726 $   18,144,966
                                               ============== ==============
                                                                            
                                                                            
                                                                            
                                                                            
              WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES              
                  CONSOLIDATED BALANCE SHEETS (continued)                   
                                                                            
            LIABILITIES AND EQUITY               April 30,      April 30,   
                                                    2014           2013     
                                               -------------  ------------- 
                                                                 (Note 1)   
CURRENT LIABILITIES:                                                        
                                                                            
  Current portion of loans payable             $      31,680  $      23,790 
  Senior secured convertible notes, net of                                  
   debt discount of $853,413 and $2,888,889,                                
   respectively                                       44,921      1,111,111 
  Derivative liability - senior secured                                     
   convertible notes                                       -      3,088,756 
  Accounts payable and accrued expenses            4,956,232      3,036,981 
  Accrued severance                                1,520,205              - 
  Billings in excess of costs and estimated                                 
   earnings on uncompleted contracts               1,448,563      1,344,159 
  Deferred revenue                                         -        113,503 
  Due related party                                  778,573              - 
  Other payable to Zurich                          1,533,757      1,743,986 
  Short-term bank loan                             3,195,000      2,432,205 
  Income taxes payable                                30,855        139,557 
  Dividend payable                                    72,034              - 
  Current liabilities held for sale                1,797,615      2,046,000 
                                               -------------  ------------- 
    Total current liabilities                     15,409,435     15,080,048 
                                                                            
Loans payable, net of current portion                 56,537         66,874 
Secured promissory note, related parties             500,000              - 
Loans payable, net of current portion, held                                 
 for sale                                             88,404         66,964 
Derivative liability - warrants                            -      3,858,508 
                                               -------------  ------------- 
    Total liabilities                             16,054,376     19,072,394 
                                               -------------  ------------- 
                                                                            
COMMITMENTS AND CONTINGENCIES                                               
                                                                            
EQUITY:                                                                     
                                                                            
WPCS EQUITY (DEFICIT):                                                      
  Preferred stock - 5,000,000 shares                                        
   authorized, 2,438 shares of Series E                                     
   Preferred Stock issued with $1,000 stated                                
   value, and liquidation preference of                                     
   $5,707,000                                      2,438,000              - 
  Common stock - $0.0001 par value, 14,285,714                              
   shares authorized, 13,913,164 and 993,538                                
   shares issued and outstanding, respectively         1,391             99 
  Additional paid-in capital                      66,672,106     50,844,183 
  Accumulated deficit                            (65,222,355)   (54,054,389)
  Accumulated other comprehensive income on                                 
   foreign currency translation                    1,232,003      1,433,541 
                                               -------------  ------------- 
                                                                            
    Total WPCS equity (deficit)                    5,121,145     (1,776,566)
                                                                            
    Noncontrolling interest                          846,205        849,138 
                                               -------------  ------------- 
    Total equity (deficit)                         5,967,350       (927,428)
                                               -------------  ------------- 
                                                                            
    Total liabilities and equity               $  22,021,726  $  18,144,966 
                                               =============  ============= 

 
Note 1. Certain reclassifications have been made to prior period
results to conform to the current period presentation. 
INVESTOR CONTACT: 
Capital Markets Group, LLC
Valter Pinto
PH: (914) 669-0222
or (212) 398-3486
valter@capmarketsgroup.com 
 
 
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