AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 30, 2004
REGISTRATION NO. 333-
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
WPCS INTERNATIONAL INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 98-0204758
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
140 South Village Avenue, Suite 20
Exton, PA 19341
(610) 903-0400
(Address and telephone number of principal
executive offices and principal place of business)
Andrew Hidalgo, Chief Executive Officer
140 South Village Avenue, Suite 20
Exton, PA 19341
(610) 903-0400
(Name, address and telephone number of agent for service)
Copies to:
Marc J. Ross, Esq.
Thomas A. Rose, Esq.
Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas
New York, New York 10018
(212) 930-9700
(212) 930-9725 (fax)
Approximate Date Of Commencement Of Proposed Sale To Public: From Time to Time
After This Registration Statement Becomes Effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box: X
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this Form, check the following box: |_|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
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Amount to be Proposed maximum Proposed maximum Amount of
Title of each class of securities registered(1) offering price per aggregate offering registration fee
to be registered unit(1) price
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Common Stock, $.0001 par value per share 25,000,000 $.42(2) $10,500,000 $1,235.85
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Common Stock, $.0001 par value per share,
issuable upon exercise of Warrants 25,000,000 $.70(3) $17,500,000 $2,059.75
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Common Stock, $.0001 par value per share,
issuable upon exercise of Warrants 750,000 $.42(3) $315,000 $37.07
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Total $3,332.67
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(1) Includes shares of our common stock, which may be offered pursuant to this
registration statement, which shares are issuable upon exercise of warrants held
by the selling stockholders. In addition to the shares set forth in the table,
the amount to be registered includes an indeterminate number of shares issuable
upon exercise of the warrants, as such number may be adjusted as a result of
stock splits, stock dividends and similar transactions in accordance with Rule
416.
(2) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933, using the average
of the high and low price as reported on the Over-The-Counter Bulletin Board on
December 20, 2004, which was $.40 per share.
(3) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933, based upon the
exercise price of the warrants.
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a)
may determine.
2
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED DECEMBER 30, 2004
WPCS International Incorporated
50,750,000 Shares of
Common Stock
This prospectus relates to the disposition by the selling stockholders and
their transferees of up to 50,750,000 shares of our common stock, including up
to 25,750,000 shares issuable upon the exercise of common stock purchase
warrants. The selling stockholders may dispose of common stock or interests
therein from time to time at the prevailing market price or in negotiated
transactions. The selling stockholders may be deemed underwriters of the shares
of common stock which they are offering. We will pay the expenses of registering
these shares.
Our common stock is traded on the Over-The-Counter Bulletin Board under the
symbol "WPCS." The last reported sales price for our common stock on December
28, 2004, was $.42 per share.
The Securities offered hereby involve a high degree of risk.
See "Risk Factors" beginning on page 9.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is December 30, 2004
3
TABLE OF CONTENTS
Where You Can Find More Information........................................ 5
Forward-Looking Statements................................................. 5
Prospectus Summary......................................................... 6
Recent Developments........................................................ 7
Risk Factors............................................................... 8
Use of Proceeds............................................................ 11
Selling Stockholder........................................................ 12
Plan of Distribution....................................................... 14
Description of Securities.................................................. 16
Legal Matters.............................................................. 16
Experts.................................................................... 16
4
Where You Can Find More Information
We file annual, quarterly and current reports and other information with
the Securities and Exchange Commission. You may read and copy any of these
documents at the SEC's public reference rooms in Washington, D.C. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference rooms.
Our SEC filings are also available to the public at the SEC's website at
www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be an important part of this prospectus. Any information that we
incorporate by reference is automatically updated and superseded if information
contained in this prospectus modifies or replaces that information. In addition,
any information that we file with the SEC after the date of this prospectus will
update and supersede the information in this prospectus. You must look at all of
our SEC filings that we have incorporated by reference to determine if any of
the statements in a document incorporated by reference have been modified or
superseded.
We incorporate by reference the documents listed below and any future
filings made with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until all of the shares registered hereby have
been sold:
o Our annual report on Form 10-KSB for the year ended April 30, 2004 and
2003;
o Our quarterly reports on Form 10-QSB for the quarters ended July 31
and October 31, 2004; and
o Our current reports on Form 8-K filed on August 16, 2004, November 19,
2004, November 30, 2004, and December 30, 2004.
You may request additional copies of these filings at no cost, by writing
or telephoning us at the following address or phone number:
WPCS International Incorporated
140 South Village Avenue, Suite 20
Exton, Pennsylvania 19341
Phone (610) 903-0400
You should rely only on the information contained in this prospectus or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This prospectus may only be used where it is
legal to sell these securities. The information in this prospectus may only be
accurate on the date of this prospectus.
FORWARD-LOOKING STATEMENTS
This prospectus, any prospectus supplement and the documents incorporated
by reference in this prospectus contain forward-looking statements. We have
based these forward-looking statements on our current expectations and
projections about future events.
These statements include, but are not limited to:
o our liquidity and capital resources, operating expenses, future
expenditures, our ability to implement our business plans; and
o trends in industry activity generally.
In some cases, you can identify forward-looking statements by words such as
"may," "will," "should," "expect," "plan," "could," "anticipate," "intend,"
"believe," "estimate," "predict," "potential," "goal," or "continue" or similar
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks outlined under "Risk
Factors," that may cause our or our industry's actual results, levels of
activity, performance or achievements to be materially different from any future
results, levels of activity, performance or achievements expressed or implied by
such forward-looking statements.
Unless we are required to do so under U.S. federal securities laws or other
applicable laws, we do not intend to update or revise any forward-looking
statements.
5
PROSPECTUS SUMMARY
The following summary highlights selected information contained in this
prospectus. This summary does not contain all the information you should
consider before investing in the securities. Before making an investment
decision, you should read the entire prospectus carefully, including the "Risk
Factors" section, the financial statements and the notes to the financial
statements. As used throughout this prospectus, the terms "WPCS," the "Company,"
"we," "us," and "our" refer to WPCS International Incorporated.
WPCS International Incorporated
WPCS International Incorporated is an engineering company that focuses on
the implementation requirements of wireless technology and specialty
communication systems. We provide a range of services including , site design, ,
product integration, security, structured cabling, construction and project
management. These projects may require the integration of multiple communication
components and engineering services in order to complete the customer's
requirements for the deployment of a wireless or specialty communication system.
We have an extensive customer base that includes many major corporations,
government entities and educational institutions. We have two reportable
segments, specialty communication systems and wireless infrastructure services.
Specialty communication services include project management, installation
and network integration of voice, data, video and security systems, including
fiber optic cabling and outside plant trenching. The specialty communication
systems segment represents approximately 70% of total revenue.
We define wireless infrastructure services as the internal and external
design and installation of a wireless solution to support data, voice or video
transmission between two or more points without the utilization of landline
infrastructure. Wireless infrastructure services include site survey and design,
spectrum analysis, product integration, mounting and alignment, and structured
cabling. We also provide network security, training and technical support. The
wireless infrastructure segment represents approximately 30% of total revenue.
Our principal offices are located at 140 South Village Avenue, Suite 20,
Exton, PA 19341, and our telephone number is (610) 903-0400. We are a Delaware
corporation.
We started our operations in December 2001. We have incurred net losses
since our inception. For the year ended April 30, 2004, we generated revenue in
the amount of $22,076,246 and a net loss of $124,187. For the six months ended
October 31, 2004, we generated revenue of $17,574,419 and net income of $107,658
and we have reported net income for each of the past three fiscal quarters.
The Offering
Common stock outstanding before the offering 45,849,976 shares.
Common stock covered hereby Up to 50,750,000 shares, including the following:
25,000,000 shares of common stock, and
up to 25,000,000 shares of common stock issuable upon the
exercise of common stock purchase warrants at an exercise
price of $.70 per share, and up to 750,000 issuable upon the
exercise of common stock purchase warrants at an exercise
price of $.40 per share.
This number would represent 70.9% of our then current
outstanding stock.
Common stock to be outstanding after the offering Up to 71,599,976 shares.
Risk Factors See "Risk Factors," beginning on page 9 for a description of
certain factors you should consider before making an
investment in our common stock.
Use of proceeds We may receive proceeds from the sale of our common stock
issued upon conversion outstanding warrants. We expect to use
the proceeds received from the exercise of the warrants, if
any, for general working capital purposes or for future
acquisitions. See "Use of Proceeds" for a complete
description.
OTC BB Symbol WPCS
6
Recent Developments
Acquisition
On November 24, 2004, we acquired Quality Communications & Alarm Company,
Inc., a New Jersey corporation, for $6,700,000 in cash, subject to adjustment.
Quality was acquired pursuant to a Stock Purchase Agreement among WPCS
International Incorporated, Richard Schubiger, Matthew Haber and Brian Fortier,
dated as of November 24, 2004. In connection with the acquisition, Quality
entered into employment agreements with Messrs. Schubiger, Haber and Fortier,
each for a period of two years.
Quality is a provider of wireless infrastructure services and has
established a strong presence in the public safety sector and gaming industry
with well-known clients such as Nextel, New Jersey Transit, Motorola, The
Seminole Tribe of Florida, Mohegan Sun Casino, Bally's Park Place Hotel &
Casino, Resorts International, Taj Mahal Casino and The Hard Rock Cafe. The
financing for this transaction was completed through the issuance of the common
stock described below.
Financing
On November 16, 2004, we sold an aggregate of $10,000,000 of common stock
and common stock purchase warrants to eight investors. We sold an aggregate of
25,000,000 shares of common stock and 25,000,000 warrants to the investors. The
common stock and warrants were issued in a private placement transaction
pursuant to Section 4(2) under the Securities Act of 1933. Pursuant to the terms
of sale, we agreed to cause a resale registration statement covering the common
stock and the common stock issuable upon exercise of the warrants to be filed no
later than 45 days after the closing, which is the purpose of this registration
statement.
Each warrant is exercisable for a period of five years at a price of $0.70
per share, subject to certain adjustments. The exercise price of the warrants is
subject to adjustment for subsequent lower price issuances by us, as well as
customary adjustment provisions for stock splits, combinations, dividends and
the like. At any time after the registration statement is effective, the
warrants are callable by us, upon 30 days notice, should the common stock trade
at or above $2.10 for 25 out of 30 consecutive trading days. A maximum of 20% of
the warrants may be called in any three-month period.
We paid the placement agent of the offering, Punk, Ziegel & Company, a cash
fee of 6.5% of the proceeds of the offering. In addition, Punk, Ziegel received
warrants to purchase 750,000 shares of Common Stock, exercisable for a period of
five years at an exercise price of $.40 per share. We also paid a fee of
$100,000 to Dominick & Dominick LLC.
Reverse Stock Split
In connection with sale of the common stock and warrants, we agreed to
effectuate a one-for-12 reverse split of our outstanding common stock. The
reverse split will be effectuated on or about January 9, 2005. We also agreed to
seek a listing on the Nasdaq SmallCap Stock Market. There can be no assurance we
will be successful in our application for listing. The reverse stock split has
not been retroactively accounted for in this prospectus or in the financial
statements incorporated by reference in this prospectus. Assuming the upcoming
one-for-twelve reverse stock split was in effect for all periods incorporated by
reference, earnings (loss) per share would have been as follows:
Three months Three months
Year ended ended ended Six months ended
April 30, July 31, October 31, October 31,
2004 2003 2004 2003 2004 2003 2004 2003
------- ------- ------- ------- ------- ------- ------- -------
Basic net income ( loss) per
common share $(0.08) $(0.64) $ 0.04 $(0.11) $ 0.02 $ 0.01 $ 0.06 $(0.08)
Diluted net income ( loss) per
common share $(0.08) $(0.64) $ 0.04 $(0.11) $ 0.02 $ 0.01 $ 0.06 $(0.08)
7
RISK FACTORS
An investment in our common stock involves a high degree of risk. Before
deciding whether to invest, you should read and consider carefully the following
risk factors.
We have a history of operating losses and may never become profitable
We incurred a net loss of approximately $124,000 for the year ended April
30, 2004. For the six months ended October 31, 2004, we had net income of
approximately $108,000. There can be no assurance that we will sustain
profitability or positive cash flow from operating activities in the future. If
we cannot achieve operating profitability or positive cash flow from operating
activities, we may not be able to meet our working capital requirements. If we
are unable to meet our working capital requirements, we are likely to reduce or
cease all or part of our operations.
We may be unable to obtain the additional capital required to grow our business.
We may have to curtail our business if we cannot find adequate funding.
Our ability to grow depends significantly on our ability to expand our
operations through internal growth and by acquiring other companies or assets
that require significant capital resources. We may need to seek additional
capital from public or private equity or debt sources to fund our growth and
operating plans and respond to other contingencies such as:
o shortfalls in anticipated revenues or increases in expenses;
o the development of new services; or
o the expansion of our operations, including the recruitment of additional
personnel.
We cannot be certain that we will be able to raise additional capital in
the future on terms acceptable to us or at all. If alternative sources of
financing are insufficient or unavailable, we may be required to modify our
growth and operating plans in accordance with the extent of available financing.
Our success is dependent on growth in the deployment of wireless networks, and
to the extent that such growth slows down, our business may be harmed.
The wireless industry has historically experienced a dramatic rate of
growth both in the United States and internationally. Recently, however, many
end users have been re-evaluating their network deployment plans in response to
downturns in the capital markets, changing perceptions regarding industry
growth, the adoption of new wireless technologies, increased price competition
and a general economic slowdown in the United States and internationally. It is
difficult to predict whether these changes will result in a downturn in the
wireless industry. If the rate of growth should slow down and end users continue
to reduce their capital investments in wireless infrastructure or fail to expand
their networks, our operating results may decline which could cause a decline in
our profits.
The uncertainty associated with rapidly changing wireless technologies may
also continue to negatively impact the rate of deployment of wireless networks
and the demand for our services. End users face significant challenges in
assessing their bandwidth demands and in acceptance of rapidly changing enhanced
wireless capabilities. If end users continue to perceive that the rate of
acceptance of next generation wireless products will grow more slowly than
previously expected, they may, as a result, continue to slow their deployment of
next generation wireless technologies. Any significant slowdown will reduce the
demand for our services and would result in negative net growth, net losses, and
potentially a reduction in our business operations.
8
The increase of services offered by equipment vendors could cause a reduction in
demand for our services.
Recently, the wireless equipment vendors have increased the services they
offer for their technology. This activity and the potential continuing trend
towards offering services may lead to a greater ability among equipment vendors
to provide a comprehensive range of wireless services, and may simplify
integration and installation, which could lead to a reduction in demand for our
services. Moreover, by offering certain services to end users, equipment vendors
could reduce the number of our current or potential customers and increase the
bargaining power of our remaining customers, which may result in a decline in
our net revenue and profits.
Our quarterly results fluctuate and may cause our stock price to decline.
Our quarterly operating results have fluctuated in the past and will likely
fluctuate in the future. As a result, we believe that period to period
comparisons of our results of operations are not a good indication of our future
performance. A number of factors, many of which are outside of our control, are
likely to cause these fluctuations.
The factors outside of our control include:
o Wireless market conditions and economic conditions generally;
o Timing and volume of customers' specialty communication projects;
o The timing and size of wireless deployments by end users;
o Fluctuations in demand for our services;
o Changes in our mix of customers' projects and business
activities;
o The length of sales cycles;
o Adverse weather conditions, particularly during the winter
season, could effect our ability to render specialty
communication services in certain regions of the United States;
o The ability of certain customers to sustain capital resources to
pay their trade accounts receivable balances;
o Reductions in the prices of services offered by our competitors;
and
o Costs of integrating technologies or businesses that we add.
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The factors substantially within our control include:
o Changes in the actual and estimated costs and time to complete
fixed-price, time-certain projects that may result in revenue
adjustments for contracts where revenue is recognized under the
percentage of completion method;
o The timing of expansion into new markets, both domestically and
internationally;
o Costs incurred to support internal growth and acquisitions;
o Fluctuations in operating results caused by acquistions; and
o The timing and payments associated with possible acquisitions.
----------------------------------------------------------------------
Because our operating results may vary significantly from quarter to
quarter, our operating results may not meet the expectations of securities
analysts and investors, and our common stock could decline significantly which
may expose us to risks of securities litigation, impair our ability to attract
and retain qualified individuals using equity incentives and make it more
difficult to complete acquisitions using equity as consideration.
Failure to keep pace with the latest technological changes could result in
decreased revenues.
The market for our services is characterized by rapid change and
technological improvements. Failure to respond in a timely and cost-effective
way to these technological developments could result in serious harm to our
business and operating results. We have derived, and we expect to continue to
derive, a substantial portion of our revenues from creating wireless networks
that are based upon today's leading technologies and that are capable of
adapting to future technologies. As a result, our success will depend, in part,
on our ability to develop and market service offerings that respond in a timely
manner to the technological advances of our customers, evolving industry
standards and changing client preferences.
9
Failure to properly manage projects may result in costs or claims.
Our engagements often involve large scale, highly complex projects
involving wireless networks and specialty communication systems utilizing
leading technology. The quality of our performance on such projects depends in
large part upon our ability to manage the relationship with our customers, and
to effectively manage the project and deploy appropriate resources, including
third-party contractors, and our own personnel, in a timely manner. Any defects
or errors or failure to meet clients' expectations could result in claims for
substantial damages against us. Our contracts generally limit our liability for
damages that arise from negligent acts, error, mistakes or omissions in
rendering services to our clients. However, we cannot be sure that these
contractual provisions will protect us from liability for damages in the event
we are sued. In addition, in certain instances, we guarantee customers that we
will complete a project by a scheduled date or that the network will achieve
certain performance standards. As a result, we often have to make judgments
concerning time and labor costs. If the project or network experiences a
performance problem, we may not be able to recover the additional costs we will
incur, which could exceed revenues realized from a project. Finally, if we
miscalculate the resources or time we need to complete a project with capped or
fixed fees, our operating results could seriously decline.
Potential future acquisitions could be difficult to integrate, disrupt our
business, dilute stockholder value and adversely affect our operating results.
Since November 1, 2002, we have acquired five companies and we intend to
further expand our operations through acquisitions over time. This may require
significant management time and financial resources because we may need to
integrate widely dispersed operations with distinct corporate cultures. Our
failure to manage future acquisitions successfully could seriously harm our
operating results. Also, acquisition costs could cause our quarterly operating
results to vary significantly. Furthermore, our stockholders would be diluted if
we financed the acquisitions by incurring convertible debt or issuing
securities. Although we currently only have operations within the United States,
if we were to acquire an international operation; we will face additional risks,
including:
o difficulties in staffing, managing and integrating international
operations due to language, cultural or other differences;
o different or conflicting regulatory or legal requirements;
o foreign currency fluctuations; and
o diversion of significant time and attention of our management.
Risks Relating to our Common Stock
There are a Large Number of Shares Being Registered for Resale and the Sale of
These Shares May Cause the Price of Our Stock to Drop.
Prior to this Offering, we had 45,849,976 shares of common stock issued and
outstanding. Of those shares, 25,000,000 are being registered for resale
together with up to 25,750,000 additional shares of common stock issuable upon
the exercise of outstanding warrants. As a result, the registration of these
shares may result in substantial sales of our common stock, which could cause
our stock price to drop.
Our Common Stock is Subject to the "Penny Stock" Rules of the SEC and the
Trading Market in our Securities is Limited, Which Makes Transactions in our
Stock Cumbersome and May Reduce the Value of an Investment in our Stock.
Since our common stock is not listed or quoted on any exchange or on
Nasdaq, and no other exemptions currently apply, trading in our common stock on
the Over-The-Counter Bulletin Board is subject to the "penny stock" rules of the
SEC. These rules require, among other things, that any broker engaging in a
transaction in our securities provide its customers with a risk disclosure
document, disclosure of market quotations, if any, disclosure of the
compensation of the broker and its salespersons in the transaction, and monthly
account statements showing the market values of our securities held in the
customer's accounts. The brokers must provide bid and offer quotations and
compensation information before making any purchase or sale of a penny stock and
also provide this information in the customer's confirmation. Generally, brokers
may be less willing to execute transactions in securities subject to the "penny
stock" rules. This may make it more difficult for investors to dispose of our
common stock and cause a decline in the market value of our stock.
10
USE OF PROCEEDS
This prospectus relates to shares of our common stock or interests therein
that may be offered and sold from time to time by the selling stockholders or
their transferees. We will not receive any proceeds from the disposition of
shares of common stock or interests therein in this offering. However, we will
receive the sale price of any common stock we sell to the selling stockholder
upon exercise of the warrants. We expect to use the proceeds received from the
exercise of the warrants, if any, for general working capital purposes or for
future acquisitions. We have no current plans, arrangements or agreements for
any future acquisitions. The selling stockholders will be entitled to exercise
the warrants on a cashless basis if the shares of common stock underlying the
warrants are not then registered pursuant to an effective registration
statement. In the event that the selling stockholders exercise the warrants on a
cashless basis, then we will not receive any proceeds. In addition, we have
received net proceeds of approximately $9,200,000 from the sale of the common
stock and the warrants. Approximately $7,000,000 of the net proceeds were used
for the acquisition of Quality and related costs. The balance of the net
proceeds will be used for working capital.
11
SELLING STOCKHOLDERS
The following table sets forth the common stock ownership of the selling
stockholders as of December 20, 2004, including the number of shares of common
stock issuable upon the exercise of warrants held by the selling stockholders.
Other than as set forth in the following table, the selling stockholders have
not held any position or office or had any other material relationship with us
or any of our predecessors or affiliates within the past three years.
Total Percentage
Total Shares of Percentage Beneficial of Common
Common Stock, of Common Beneficial Percentage of Ownership Stock Owned
Including Upon Stock, Ownership Common Stock After the After
Exercise of Assuming Before the Owned Before Offering Offering
Name Warrants(1) Full Exercise Offering** Offering** (3) (3)
- ------------------- ----------------- ------------- ------------ -------------- ------------ -------------
Special Situations
Fund III, L.P.(4) 17,500,000 32.1% 17,500,000(2) 32.1% -- --
Special Situations
Private Equity
Fund, L.P.(4) 12,500,000 24.0% 12,500,00 24.0% -- --
Barron Partners,
L.P.(5) 10,000,000 19.7% 12,848,150 24.6% 2,848,150 6.0%
SF Capital
Partners Ltd.(2)(6) 5,000,000 10.3% 2,500,000 5.5% -- --
Wasatch Funds,
Inc.(2)(7) 2,500,000 5.5% 2,408,077 4.99% -- --
RationalWave
Onshore Equity
Fund, L.P.(8) 1,250,000 2.7% 1,250,000 2.7% -- --
Woodmont
Investment
Limited(9) 437,500 0.9% 437,500 0.9% -- --
Sedna Partners,
LP(10) 812,500 1.8% 812,500 1.8% -- --
Punk, Ziegel
& Company(11) 750,000 1.6% 750,000 1.6% -- --
The number and percentage of shares beneficially owned is determined in
1accordance with Rule 13d-3 of the Securities Exchange Act of 1934, and the
information is not necessarily indicative of beneficial ownership for any other
purpose. Under such rule, beneficial ownership includes any shares as to which
the selling stockholders have sole or shared voting power or investment power
and also any shares, which the selling stockholders have the right to acquire
within 60 days. The actual number of shares of common stock issuable upon the
conversion of the secured convertible notes is subject to adjustment depending
on, among other factors, the future market price of the common stock, and could
be materially less or more than the number estimated in the table.
12
(1) The actual number of shares of common stock offered in this prospectus, and
included in the registration statement of which this prospectus is a part,
includes such additional number of shares of common stock as may be issued or
issuable upon exercise of the warrants by reason of any stock split, stock
dividend or similar transaction involving the common stock, in accordance with
Rule 416 under the Securities Act of 1933.
(2) This selling stockholder has contractually agreed to restrict their ability
to exercise their warrants and receive shares of our common stock such that the
number of shares of common stock held by them in the aggregate and their
affiliates after such exercise does not exceed 4.99% of the then issued and
outstanding shares of common stock as determined in accordance with Section
13(d) of the Exchange Act, except upon 61 days' prior notice.
(3) Assumes that all securities registered will be sold.
(4) MGP Advisors Limited ("MGP") is the general partner of Special Situations
Fund III, L.P. MG Advisors, L.L.C. ("MG") is the general partner of and
investment adviser to the Special Situations Private Equity Fund, L.P. Austin W.
Marxe and David M. Greenhouse are the principal owners of MPG and MG and are
principally responsible for the selection, acquisition and disposition of the
portfolio securities by each investment adviser on behalf of its fund.
(5) Andrew Worden has voting and investment power of the shares that this
selling stockholder owns.
(6) Michael A. Roth and Brian J. Stark have voting and investment power of the
shares that this selling stockholder owns.
(7) Brian Bythrow of Wasatch Advisors, Inc. has voting and investment power of
the shares that this selling stockholder owns.
(8) Mark Rosenblatt has voting and investment power of the shares that this
selling stockholder owns.
(9) Jay Goldman has voting and investment power of the shares that this selling
stockholder owns.
(10) Rengan Rajaratnam has voting and investment power of the shares that this
selling stockholder owns.
(11) William Punk has voting and investment power of the shares that this
selling stockholder owns.
13
PLAN OF DISTRIBUTION
The selling stockholders, which as used herein includes donees, pledgees,
transferees or other successors-in-interest selling shares of common stock or
interests in shares of common stock received after the date of this prospectus
from a selling stockholder as a gift, pledge, partnership distribution or other
transfer, may, from time to time, sell, transfer or otherwise dispose of any or
all of their shares of common stock or interests in shares of common stock on
any stock exchange, market or trading facility on which the shares are traded or
in private transactions. These dispositions may be at fixed prices, at
prevailing market prices at the time of sale, at prices related to the
prevailing market price, at varying prices determined at the time of sale, or at
negotiated prices.
The selling stockholders may use any one or more of the following methods
when disposing of shares or interests therein:
- ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
- block trades in which the broker-dealer will attempt to sell the shares
as agent, but may position and resell a portion of the block as principal to
facilitate the transaction;
- purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
- an exchange distribution in accordance with the rules of the applicable
exchange;
- privately negotiated transactions;
- short sales effected after the date the registration statement of which
this Prospectus is a part is declared effective by the SEC;
- through the writing or settlement of options or other hedging
transactions, whether through an options exchange or otherwise;
- broker-dealers may agree with the selling stockholders to sell a
specified number of such shares at a stipulated price per share;
- a combination of any such methods of sale; and
- any other method permitted pursuant to applicable law.
The selling stockholders may, from time to time, pledge or grant a security
interest in some or all of the shares of common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell the shares of common stock, from time to time, under
this prospectus, or under an amendment to this prospectus under Rule 424(b)(3)
or other applicable provision of the Securities Act amending the list of selling
stockholders to include the pledgee, transferee or other successors in interest
as selling stockholders under this prospectus. The selling stockholders also may
transfer the shares of common stock in other circumstances, in which case the
transferees, pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus.
In connection with the sale of our common stock or interests therein, the
selling stockholders may enter into hedging transactions with broker-dealers or
other financial institutions, which may in turn engage in short sales of the
common stock in the course of hedging the positions they assume. The selling
stockholders may also sell shares of our common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The selling
stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).
The aggregate proceeds to the selling stockholders from the sale of the
common stock offered by them will be the purchase price of the common stock less
discounts or commissions, if any. Each of the selling stockholders reserves the
right to accept and, together with their agents from time to time, to reject, in
whole or in part, any proposed purchase of common stock to be made directly or
through agents. We will not receive any of the proceeds from this offering. Upon
any exercise of the warrants by payment of cash, however, we will receive the
exercise price of the warrants.
14
The selling stockholders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act of
1933, provided that they meet the criteria and conform to the requirements of
that rule.
The selling stockholders and any underwriters, broker-dealers or agents
that participate in the sale of the common stock or interests therein may be
"underwriters" within the meaning of Section 2(11) of the Securities Act. Any
discounts, commissions, concessions or profit they earn on any resale of the
shares may be underwriting discounts and commissions under the Securities Act.
Selling stockholders who are "underwriters" within the meaning of Section 2(11)
of the Securities Act will be subject to the prospectus delivery requirements of
the Securities Act.
To the extent required, the shares of our common stock to be sold, the
names of the selling stockholders, the respective purchase prices and public
offering prices, the names of any agents, dealer or underwriter, any applicable
commissions or discounts with respect to a particular offer will be set forth in
an accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement that includes this prospectus.
In order to comply with the securities laws of some states, if applicable,
the common stock may be sold in these jurisdictions only through registered or
licensed brokers or dealers. In addition, in some states the common stock may
not be sold unless it has been registered or qualified for sale or an exemption
from registration or qualification requirements is available and is complied
with.
We have advised the selling stockholders that the anti-manipulation rules
of Regulation M under the Exchange Act may apply to sales of shares in the
market and to the activities of the selling stockholders and their affiliates.
In addition, we will make copies of this prospectus (as it may be supplemented
or amended from time to time) available to the selling stockholders for the
purpose of satisfying the prospectus delivery requirements of the Securities
Act. The selling stockholders may indemnify any broker-dealer that participates
in transactions involving the sale of the shares against certain liabilities,
including liabilities arising under the Securities Act.
We have agreed to indemnify the selling stockholders against liabilities,
including liabilities under the Securities Act and state securities laws,
relating to the registration of the shares offered by this prospectus.
We have agreed with the selling stockholders to keep the registration
statement of which this prospectus constitutes a part effective until the
earlier of (1) such time as all of the shares covered by this prospectus have
been disposed of pursuant to and in accordance with the registration statement
or (2) the date on which the shares may be sold pursuant to Rule 144(k) of the
Securities Act.
15
DESCRIPTION OF SECURITIES
The following description of our capital stock is a summary and is
qualified in its entirety by the provisions of our articles of incorporation,
with amendments, all of which have been filed as exhibits to our registration
statement of which this prospectus is a part.
Common Shares
We are authorized to issue up to 75,000,000 shares of Common Stock, par
value $.0001. As of December 20, 2004, there were 45,849,976 shares of common
stock issued and outstanding and 5,000,000 shares reserved for issuance pursuant
to our stock option plans. The holders of common stock are entitled to one vote
for each share held of record on all matters to be voted on by the shareholders.
The holders of common stock are entitled to receive dividends ratably, when, as
and if declared by the board of directors, out of funds legally available. In
the event of a liquidation, dissolution or winding-up of us, the holders of
common stock are entitled to share equally and ratably in all assets remaining
available for distribution after payment of liabilities and after provision is
made for each class of stock, if any, having preference over the common stock.
The holders of shares of common stock, as such, have no conversion, preemptive,
or other subscription rights and there are no redemption provisions applicable
to the common stock.
Preferred Shares
We are authorized to issue up to 5,000,000 shares of preferred stock, par
value $.0001. The shares of preferred stock may be issued in series, and shall
have such voting powers, full or limited, or no voting powers, and such
designations, preferences and relative participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, as shall be
stated and expressed in the resolution or resolutions providing for the issuance
of such stock adopted from time to time by the board of directors. The board of
directors is expressly vested with the authority to determine and fix in the
resolution or resolutions providing for the issuances of preferred stock the
voting powers, designations, preferences and rights, and the qualifications,
limitations or restrictions thereof, of each such series to the full extent now
or hereafter permitted by the laws of the State of Delaware.
Recent Financing
On November 16, 2004, we sold an aggregate of $10,000,000 of common stock
and common stock purchase warrants to eight investors. We sold an aggregate of
25,000,000 shares of common stock and 25,000,000 warrants to the investors. The
common stock and warrants were issued in a private placement transaction
pursuant to Section 4(2) under the Securities Act of 1933. Pursuant to the terms
of sale, we agreed to cause a resale registration statement covering the common
stock and the common stock issuable upon exercise of the warrants to be filed no
later than 45 days after the closing, which is the purpose of this registration
statement.
Each warrant is exercisable for a period of five years at a price of $0.70
per share, subject to certain adjustments. The exercise price of the warrants is
subject to adjustment for subsequent lower price issuances by us, as well as
customary adjustment provisions for stock splits, combinations, dividends and
the like. At any time after the registration statement is effective, the
warrants are callable by us, upon 30 days notice, should the common stock trade
at or above $2.10 for 25 out of 30 consecutive trading days. A maximum of 20% of
the warrants may be called in any three-month period.
Transfer Agent
Interwest Transfer Co., Inc., 1981 E. Murray Holladay Road, Suite 100, Salt
Lake City Utah 84117, is the transfer agent and registrar for our securities.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for
WPCS International Incorporated by Sichenzia Ross Friedman Ference LLP, New
York, New York.
EXPERTS
WPCS International Incorporated's consolidated financial statements as of
and for the years ended April 30, 2004 and 2003, incorporated by reference in
this prospectus, have been audited by J.H. Cohn LLP, Independent Registered
Public Accounting Firm, as stated in their report incorporated by reference
herein in reliance upon the report of such firm given upon their authority as
experts in accounting and auditing.
16
ADDITIONAL INFORMATION
WPCS is subject to the informational requirements of the Securities
Exchange Act of 1934, and in accordance therewith files reports, proxy or
information statements and other information with the Securities and Exchange
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies of such material can be obtained from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.20549, at
prescribed rates. In addition, the Commission maintains a web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The address of the
Commission's web site is http://www.sec.gov.
WPCS International Incorporated has filed with the Commission, a
registration statement on Form S-2 under the Securities Act of 1933 with respect
to the common stock being offered hereby. As permitted by the rules and
regulations of the Commission, this prospectus does not contain all the
information set forth in the registration statement and the exhibits and
schedules thereto. For further information with respect to the Company and the
common stock offered hereby, reference is made to the registration statement,
and such exhibits and schedules. A copy of the registration statement, and the
exhibits and schedules thereto, may be inspected without charge at the public
reference facilities maintained by the Commission at the addresses set forth
above, and copies of all or any part of the registration statement may be
obtained from such offices upon payment of the fees prescribed by the
Commission. In addition, the registration statement may be accessed at the
Commission's web site. Statements contained in this prospectus as to the
contents of any contract or other document are not necessarily complete and, in
each instance, reference is made to the copy of such contract or document filed
as an exhibit to the registration statement, each such statement being qualified
in all respects by such reference.
17
50,750,000
Shares of
Common Stock
of
WPCS INTERNATIONAL INCORPORATED
PROSPECTUS
December 30, 2004
18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth an itemization of all estimated expenses,
all of which we will pay, in connection with the issuance and distribution of
the securities being registered:
Nature of Expense Amount
- ------------------ ------------------------------------
SEC Registration fee $ 3,332.67
Accounting fees and expenses 5,000.00*
Legal fees and expenses 20,000.00*
------------------------------------
TOTAL $ 28,332.67*
====================================
* Estimated
Item 15. Indemnification of Directors and Officers
Our Articles of Incorporation limit, to the maximum extent permitted by
Delaware law, the personal liability of directors for monetary damages for
breach of their fiduciary duties as a director. Our Bylaws provided that we
shall indemnify our officers and directors and may indemnify our employees and
other agents to the fullest extent permitted by Delaware law.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify a director, officer, employee or agent made a party to
an action by reason of that fact that he or she was a director, officer employee
or agent of the corporation or was serving at the request of the corporation
against expenses actually and reasonably incurred by him or her in connection
with such action if he or she acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of the
corporation and with respect to any criminal action, had no reasonable cause to
believe his or her conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling us pursuant to
the foregoing provisions, we have been advised that in the opinion of the
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
19
Item 16. Exhibits
The following exhibits are included as part of this Form S-2. References to "us"
in this Exhibit List mean WPCS International Incorporated, a Delaware
corporation.
Exhibit No. Description
3.1 Certificate of Incorporation of Internet International
Communications Ltd. (our predecessor), incorporated by reference
to Exhibit 3.1 of wowtown.com, Inc.'s Form SB-2, filed June 8,
2000.
3.2 Bylaws of Internet International Communications Ltd. (our
predecessor), incorporated by reference to Exhibit 3.2 of
wowtown.com, Inc.'s Form SB-2, filed June 8, 2000.
4.1 2002 Employee Stock Option Plan, incorporated by reference to
Exhibit 4.4 of WPCS International Incorporated's Annual Report on
Form 10-KSB, filed August 14, 2003.
4.2 Form of 2003 Warrant, incorporated by reference to Exhibit 4.5 of
WPCS International Incorporated's Annual Report on Form 10-KSB,
filed August 14, 2003.
4.3 Form of Common Stock Purchase warrant, dated as of November 16,
2004, incorporated by reference to Exhibit 10.2 of WPCS
International Incorporated's Report on Form 8-K, filed November
19, 2004.
5.1 Sichenzia Ross Friedman Ference LLP Opinion and Consent (filed
herewith).
10.1 Andrew Hidalgo Employment Agreement, dated as of February 1,
2004, incorporated by reference to Exhibit 10.1 of WPCS
International Incorporated's registration statement on Form
SB-2/A, filed April 30, 2004.
10.2 Donald Walker Employment Agreement, incorporated by reference to
Exhibit 10.3 of WPCS International Incorporated's Annual Report
on Form 10-KSB, filed August 14, 2003.
10.4 Gary Walker Employment Agreement, incorporated by reference to
Exhibit 10.4 of WPCS International Incorporated's Annual Report
on Form 10-KSB, filed August 14, 2003.
10.5 Joseph Heater Employment Agreement, dated as of February 1, 2004,
incorporated by reference to Exhibit 10.5 of WPCS International
Incorporated's registration statement on Form SB-2/A, filed April
30, 2004.
10.6 Agreement and Plan of Merger by and among Phoenix Star Ventures,
Inc., WPCS Acquisition Corp., a Delaware corporation, WPCS
Holdings, Inc., a Delaware corporation, and Andy Hidalgo, dated
as of May 17, 2002, incorporated by reference to Exhibit 1 of
WPCS International Incorporated's Current Report on Form 8-K/A,
filed June 12, 2002.
10.7 Agreement and Plan of Merger by and among WPCS International
Incorporated, Invisinet Acquisitions Inc., Invisinet, Inc., J.
Johnson LLC and E. J. von Schaumburg made as of the 13th day of
November, 2002, incorporated by reference to Exhibit 3 of WPCS
International Incorporated's Current Report on Form 8-K, filed
November 27, 2002.
10.8 Amendment to Invisinet Bonus Agreement, dated as of May 27, 2003,
incorporated by reference to Exhibit 10.8 of WPCS International
Incorporated's Annual Report on Form 10-KSB, filed August 14,
2003.
20
10.9 Agreement and Plan of Merger by and among WPCS International
Incorporated, Walker Comm Merger Corp., Walker Comm, Inc., Donald
C. Walker, Gary R. Walker, and Tanya D. Sanchez made as of the
30th day of December, 2002, incorporated by reference to Exhibit
3 of WPCS International Incorporated's Current Report on Form
8-K, filed January 14, 2003.
10.10 Agreement and Plan of Merger by and among WPCS International
Incorporated, Clayborn Contracting Acquisition Corp., Clayborn
Contracting Group, Inc., David G. Gove and Sharon Gove made as of
the 22nd day of August, 2003, incorporated by reference to
Exhibit 3 of WPCS International Incorporated's Current Report on
Form 8-K, filed August 29, 2003.
10.11 Agreement and Plan of Merger by and among WPCS International
Incorporated, Heinz Acquisition Corp., Heinz Corporation and
James Heinz made as of the 2nd day of April, 2004, incorporated
by reference to Exhibit 3 of WPCS International Incorporated's
Current Report on Form 8-K, filed April 9, 2004.
10.12 James Heinz Employment Agreement, dated as of April 1, 2004,
incorporated by reference to Exhibit 10.12 of WPCS International
Incorporated's registration statement on Form SB-2/A, filed April
30, 2004.
10.13 Stock Purchase Agreement among WPCS International Incorporated,
Richard Schubiger, Matthew Haber and Brain Fortier, dated as of
November 24, 2004, incorporated by reference to Exhibit 10.1 of
WPCS International Incorporated's Report on Form 8-K, filed
November 24, 2004.
10.14 Securities Purchase Agreement, dated as of November 16, 2004,
Incorporated, Richard Schubiger, Matthew Haber and Brain Fortier,
dated as of November 24, 2004, incorporated by reference to
Exhibit 10.1 of WPCS International Incorporated's Report on Form
8-K, filed November 19, 2004.
10.15 Securities Purchase Agreement, dated as of November 16, 2004,
incorporated by reference to Exhibit 10.1 of WPCS International
Incorporated's Report on Form 8-K, dated November 16, 2004
10.16 Form of Common Stock Purchase Warrant, dated as of November 16,
2004, incorporated by reference to Exhibit 10.2 of WPCS
International Incorporated's Report on Form 8-K, dated November
16, 2004
10.17 Form of Registration Rights Agreement, dated as of November 16,
2004, incorporated by reference to Exhibit 10.3 of WPCS
International Incorporated's Report on Form 8-K, dated November
16, 2004
23.1 Consent of J. H. Cohn LLP (filed herewith).
23.2 Consent of legal counsel (see Exhibit 5).
21
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file a post-effective amendment to this Registration Statement
during any period in which offers or sales are being made:
(i) to include any Prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually, or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) ((S)230.424(b) of this Chapter) if, in the
aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective Registration
Statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement of any
material change to such information in the Registration Statement.
(2) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
this offering.
(3) To provide to the Underwriters at the closing specified in the
underwriting agreement certificates in such denominations and registered in such
names as required by the Underwriter to permit prompt delivery to each
purchaser.
(4) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and this offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(5) That, insofar as indemnification for liabilities arising from the
Securities Act may be permitted to directors, officers, and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(6) That, for purposes of determining any liability under the Securities
Act, the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or Rule
497(h) under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
22
SIGNATURES
Pursuant to the requirements of the Act, the Company certifies that it has
reasonable grounds to believe that it meets all of the requirement for filing on
Form S-2 and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the State of
Pennsylvania on December 30, 2004.
WPCS INTERNATIONAL INCORPORATED
By:/s/ Andrew Hidalgo
-------------------
Andrew Hidalgo, Chairman, Chief Executive Officer
and Director (Chief Executive Officer)
By:/s/ Joseph Heater
-----------------
Joseph Heater, Chief Financial Officer (Principal
Financial Officer and Principal Accounting
Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned officers and directors of WPCS International Incorporated,
a Delaware corporation, do hereby constitute and appoint Andrew Hidalgo the
lawful attorney in-fact and agent with full power and authority to do any and
all acts and things and to execute any and all instruments which said attorney
and agent, determine may be necessary or advisable or required to enable said
corporation to comply with the Securities Act of 1933, as amended, and any rules
or regulations or requirements of the Securities and Exchange Commission in
connection with this Registration Statement. Without limiting the generality of
the foregoing power and authority, the powers granted include the power and
authority to sign the names of the undersigned officers and directors in the
capacities indicated below to this Registration Statement, and to any and all
instruments or documents filed as part of or in conjunction with this
Registration Statement or amendments or supplements thereof, and each of the
undersigned hereby ratifies and confirms that said attorney and agent, shall do
or cause to be done by virtue thereof. This Power of Attorney may be signed in
several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of Attorney
and pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities on December 30, 2004.
Signature Title
--------- -----
/s/ Andrew Hidalgo Chairman, Chief Executive Officer
- --------------------- and Director
Andrew Hidalgo
/s/ Norm Dumbroff Director
- ---------------------
Norm Dumbroff
/s/ Neil Hebenton Director
- ---------------------
Neil Hebenton
/s/ Gary Walker Director
- ---------------------
Gary Walker
/s/ William Whitehead Director
- ---------------------
William Whitehead
23