Exhibit 99.1
PRESS RELEASE SOURCE: WPCS International Incorporated
WPCS Reports Revenue Growth and Bottom-Line Improvement
Company Reiterates FY2006 Guidance
EXTON, PA -- (PR Newswire-First Call) - July 29, 2005 - NASDAQ: WPCS - News)
WPCS International Incorporated (WPCS), a leader in wireless infrastructure
services and specialty communication systems, has reported its financial results
for the fiscal year ended April 30, 2005. For the year ended April 30, 2005,
WPCS reported total revenue of approximately $40.1 million compared to $22.1
million for the same period a year ago, which represents an increase of
approximately 82%. For the fourth quarter of FY2005, WPCS reported revenue of
approximately $11.1 million compared to $8.2 million for the same period a year
ago which represents an increase of approximately 36%. For the year ended April
30, 2005, the reported net loss was approximately $85,000 or $0.03 per share.
For the same period last year, the reported net loss was $124,000 or $0.08 per
share. As of April 30, 2005, WPCS reported approximately $20.4 million in
shareholder equity compared to $11.3 million for the same period a year ago,
which represents an increase of approximately 80%. For the fourth quarter of
FY2005, the reported net loss was approximately $296,000 or $0.08 per share. For
the same period last year, the reported net income was $310,000 or $0.16 per
share.
Andrew Hidalgo, CEO of WPCS International Incorporated, commented: "Although our
net loss improved over the prior fiscal year, management is not satisfied with
these results. WPCS managed over 800 projects in FY2005 and if it were not for
an increase in costs of $1.2 million in five specific projects we would have had
a much better earnings year. In direct response to these additional costs, we
have focused on improving our project management effort by providing advanced
training and recruiting more experienced project managers and project engineers.
Managing our rapid growth has been a challenge but we are now well positioned
from an engineering resource perspective. For the new fiscal year ending April
30, 2006, we maintain our earlier guidance of $48 million in revenue, $2.4
million in net income and $0.58 earnings per share.
Mr. Hidalgo continued, "FY2005 was a year in which WPCS accomplished many
significant milestones. We began trading on the NASDAQ, raised $10 million in
capital, concluded our fifth acquisition, initiated a new credit facility for
future growth and established cross subsidiary selling strategies. As mentioned
earlier, we have not only improved the caliber of our engineering staff but with
the additional resources added in FY2005, we have been able to further reduce
our dependency on subcontractors which should improve our gross margin.
Additional milestones include moving the entire company to one accounting
platform and consolidating our business insurance programs. Today, the wireless
market is experiencing rapid and intense growth and WPCS is positioned as an
engineering leader with the diversity to deploy all variations of wireless
infrastructure including two-way, cellular, Wi-Fi, fixed wireless, RFID and the
new WiMAX technology. With a growing backlog of $22 million and submitted bids
of $40 million, the management team at WPCS anticipates a successful FY2006."
About WPCS International Incorporated:
WPCS International Incorporated is an engineering company that focuses on the
implementation requirements of wireless technology and specialty communication
systems. The company provides a range of services including site design, product
integration, security, structured cabling, construction and product management.
The company has an extensive customer base that includes many major
corporations, government entities and educational institutions. For more
information, please visit our website at www.wpcs.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.
- -----------------------------------------------------------
Contact:
Heather Tocket / Investor Relations
WPCS International Incorporated
610-903-0400 x-102
ir@wpcs.com
WPCS INTERNATIONAL INCORPORATED. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended Three Months Ended
April 30, April 30,
2005 2004 2005 2004
----------------- -------------- ---------------- ---------------
(Note 1, 2) (Note 1, 2)
REVENUE $40,148,233 $22,076,246 $11,132,837 $8,201,630
----------------- -------------- ---------------- ---------------
COSTS AND EXPENSES:
Cost of revenue 32,445,470 17,286,099 9,008,148 7,571,098
Selling, general and administrative
expenses 7,028,850 4,441,776 2,271,896 115,658
Depreciation and amortization 682,397 382,510 251,959 128,296
----------------- -------------- ---------------- ---------------
Total costs and expenses 40,156,717 22,110,385 11,532,003 7,815,052
----------------- -------------- ---------------- ---------------
OPERATING (LOSS) INCOME (8,484) (34,139) (399,166) 386,578
OTHER EXPENSE:
Interest expense 24,702 14,048 6,077 4,638
----------------- -------------- ---------------- ---------------
(LOSS) INCOME BEFORE INCOME TAX PROVISION (33,186) (48,187) (405,243) 381,940
Income tax provision (benefit) 52,096 76,000 (109,640) 71,800
----------------- -------------- ---------------- ---------------
NET (LOSS) INCOME $ (85,282) $ (124,187) $ (295,603) $ 310,140
================= ============== ================ ===============
Basic net (loss) income per common share $ (0.03) $ (0.08) $ (0.08) $ 0.18
================= ============== ================ ===============
Diluted net (loss) income per common share $ (0.03) $ (0.08) $ (0.08) $ 0.16
================= ============== ================ ===============
Weighted average common shares outstanding:
Basic 2,679,529 1,521,697 3,821,385 1,697,154
Diluted 2,679,529 1,521,697 3,821,385 1,945,246
WPCS INTERNATIONAL INCORPORATED. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 30, APRIL 30,
ASSETS 2005 2004
------------------ -------------------
CURRENT ASSETS:
Cash and cash equivalents $ 989,252 $ 1,984,636
Accounts receivable, net 9,907,316 5,909,879
Costs and estimated earnings in excess of billings on uncompleted
contracts 908,955 2,123,031
Inventory 885,624 104,799
Prepaid expenses and other current assets 536,331 264,076
Deferred income taxes 112,000 60,000
------------------ -------------------
Total current assets
13,339,478 10,446,421
PROPERTY AND EQUIPMENT, net 1,560,271 1,005,760
CUSTOMER LISTS 1,158,388 603,333
GOODWILL 13,961,642 8,681,870
OTHER ASSETS 156,932 144,713
------------------ -------------------
Total assets $ 30,176,711 $ 20,882,097
================== ===================
WPCS INTERNATIONAL INCORPORATED. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 30, APRIL 30,
LIABILITIES AND SHAREHOLDERS' EQUITY 2005 2004
------------------- -------------------
(Note 1)
CURRENT LIABILITIES:
Borrowings under lines of credit $ 382,281 $ 551,000
Current maturities of capital lease obligation 2,073 2,534
Current maturities of loans payable 187,420 94,056
Accounts payable and accrued expenses 5,338,813 4,732,200
Billings in excess of costs and estimated earnings on uncompleted contracts 1,204,491 2,162,452
Due to shareholders 915,290 88,157
Income taxes payable 24,790 223,753
Deferred income taxes 139,000 196,100
------------------- -------------------
Total current liabilities
8,194,158 8,050,252
Capital lease obligation, net of current portion - 2,073
Loans payable, net of current portion 261,455 170,362
Due to shareholders, net of current portion 927,005 1,026,755
Deferred income taxes 439,000 344,900
------------------- -------------------
Total liabilities
9,821,618 9,594,342
------------------- -------------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred Stock - $0.0001 par value, 5,000,000 shares authorized,
none issued - -
Common Stock - $0.0001 par value, 75,000,000 shares authorized, 3,821,385
and 1,737,498 shares issued and outstanding at April 30, 2005 and 2004,
respectively 382 174
Additional paid-in capital 21,107,240 11,993,387
Unearned consulting services - (38,559)
Accumulated deficit (752,529) (667,247)
------------------- -------------------
Total shareholders' equity 20,355,093 11,287,755
------------------- -------------------
Total liabilities and shareholders' equity $ 30,176,711 $ 20,882,097
=================== ===================
Note 1. Reflects the retroactive effect of the January 10, 2005
one-for-twelve reverse stock split.
Note 2. Certain reclassifications have been made to prior period financial
statements to conform to current presentation.