8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant To Section 13 Or 15(D) of The Securities Exchange Act of 1934

Date of report (date of earliest event reported): March 19, 2007

WPCS INTERNATIONAL INCORPORATED

(Exact name of registrant as specified in its charter)

Delaware	0-26277	98-0204758
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

One East Uwchlan Avenue, Suite 301, Exton, PA 19341

(Address of principal executive offices)

Registrant’s telephone number, including area code: (610) 903-0400

Copy of correspondence to:

Marc J. Ross, Esq.

Sichenzia Ross Friedman Ference LLP

1065 Avenue of the Americas

New York, New York 10018

Tel: (212) 930-9700 Fax: (212) 930-9725

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02Results of Operations and Financial Condition

On March 19, 2007, WPCS International Incorporated (the “Company”) announced its operating results for the third fiscal quarter ended January 31, 2007. A copy of the press release that discusses this matter is filed as Exhibit 99.1 to, and incorporated by reference in, this report. The information in this Current Report is being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, except as shall be expressly set forth by specific reference in any such filing.

ITEM 9.01Financial Statements and Exhibits.

(c)Exhibits.

99.1 Press Release, dated March 19, 2007, issued by WPCS International Incorporated.

SIGNATURE

Pursuant to the requirement of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	WPCS INTERNATIONAL INCORPORATED
Dated: March 19, 2007	By:	/s/ ANDREW HIDALGO
		Andrew Hidalgo
		Chief Executive Officer

EX-99.1

Exhibit 99.1

PRESS RELEASE  SOURCE: WPCS International Incorporated 

Incorporated

WPCS Reports Record Revenue and $0.20 EPS for the 3^rd Quarter

EXTON, PA — (PR Newswire-First Call) - March, 19, 2007) WPCS International Incorporated (Nasdaq: WPCS) a leader in design-build engineering services for specialty communication systems and wireless infrastructure, has reported its financial results for the third quarter ended January 31, 2007. For the quarter ended January 31, 2007, WPCS reported total revenue of approximately $18.1 million compared to $11.8 million for the same period a year ago, which represents an increase of approximately 53%. For the third quarter of FY2007, the reported net income was approximately $1.25 million or $0.20 per diluted share. For the same period last year, the reported net loss was approximately $9 million or $2.26 per diluted share which included a non-cash charge of approximately $9.7 million related to accounting for warrant liabilities.

For the nine months ended January 31, 2007, WPCS reported total revenue of approximately $52.3 million compared to $38.2 million for the same period a year ago, which represents an increase of approximately 37%. For the nine months of FY2007, the reported net income was approximately $3.2 million or $0.54 per diluted share. For the same period last year, the reported net loss was approximately $9.6 million or $2.48 per diluted share which included a non-cash charge of approximately $11.4 million related to accounting for warrant liabilities.

Andrew Hidalgo, CEO of WPCS International Incorporated, stated: “The management team at WPCS is very pleased with the third quarter results. The financial performance reported in the third quarter keeps us on track to achieve our FY2007 guidance estimates. For the third consecutive quarter, we achieved record revenue production. In addition, we have a strong balance sheet with approximately $23 million in cash, $29 million in working capital and only $4.7 million in long term debt. Our shareholder equity and net tangible asset value has increased to approximately $47 million and $26 million respectively, which are both all time highs. WPCS has also generated over $7 million in cash from operations through the first nine months of this fiscal year ended January 31, 2007. With a backlog of $25 million and a bid list of $69 million, we continue to see a robust market for our engineering services. We anticipate a strong finish for FY2007 and a very successful FY2008.”

About WPCS International Incorporated:

WPCS International Incorporated provides design-build engineering services for specialty communication systems and wireless infrastructure including site design, product integration and project management. The company has an extensive customer base that includes 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:

Carol Lindley

WPCS International Incorporated

610-903-0400 x100

ir@wpcs.com

1

WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
	Three Months Ended						Nine Months Ended
	January 31,						January 31,
	2007			2006			2007			2006
				(Note 1 )						(Note 1 )
REVENUE	$	18,121,405		$	11,821,189		$	52,310,727		$	38,243,071
COSTS AND EXPENSES:
Cost of revenue		12,150,372			8,257,514			36,202,802			27,726,737
Selling, general and administrative expenses		3,538,395			2,204,838			9,874,455			6,820,446
Depreciation and amortization		310,074			212,334			880,965			633,394
Total costs and expenses		15,998,841			10,674,686			46,958,222			35,180,577
OPERATING INCOME		2,122,564			1,146,503			5,352,505			3,062,494
OTHER EXPENSE (INCOME):
Interest expense		112,387			70,391			326,823			182,433
Interest income		(120,164	)		(22,994	)		(294,916	)		(40,238	)
Loss on change in fair value of warrants		-			9,678,732			-			11,406,414
INCOME (LOSS) BEFORE INCOME TAX PROVISION		2,130,341			(8,579,626	)		5,320,598			(8,486,115	)
Income tax provision		878,462			432,665			2,089,642			1,153,773
NET INCOME (LOSS)	$	1,251,879			($9,012,291	)	$	3,230,956			($9,639,888	)
Basic net income (loss) per common share	$	0.23			($2.26	)	$	0.59			($2.48	)
Diluted net income (loss) per common share	$	0.20			($2.26	)	$	0.54			($2.48	)
Basic weighted average number of common shares outstanding		5,547,671			3,995,768			5,454,911			3,890,382
Diluted weighted average number of common shares outstanding		6,323,169			3,995,768			6,011,224			3,890,382

2

WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
	January 31,		April 30,
ASSETS		2007		2006
		(Unaudited)		(Note 1)
CURRENT ASSETS:
Cash and cash equivalents	$	23,028,985	$	12,279,646
Accounts receivable, net of allowance of $98,786 and $104,786 at January 31, 2007 and April 30, 2006, respectively		12,080,394		12,141,789
Costs and estimated earnings in excess of billings on uncompleted contracts		1,905,753		1,441,977
Inventory		1,660,981		1,204,540
Prepaid expenses and other current assets		682,273		286,625
Deferred income taxes		51,000		78,000
Total current assets		39,409,386		27,432,577
PROPERTY AND EQUIPMENT, net		1,930,702		1,352,216
CUSTOMER LISTS, net		1,426,805		864,388
GOODWILL		19,019,452		14,239,918
DEBT ISSUANCE COSTS, net		71,468		111,091
DEFERRED INCOME TAXES		73,000		51,000
OTHER ASSETS		233,130		71,128
Total assets	$	62,163,943	$	44,122,318

3

WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
	January 31,		April 30,
LIABILITIES AND SHAREHOLDERS' EQUITY	2007		2006
	(Unaudited)		(Note 1)
CURRENT LIABILITIES:
Current portion of capital lease obligation	$	8,960	$	-
Current portion of loans payable		269,056		231,065
Accounts payable and accrued expenses		5,895,701		4,989,861
Billings in excess of costs and estimated earnings on uncompleted contracts		2,269,810		1,085,312
Deferred revenue		493,426		128,052
Due to shareholders		747,000		381,377
Income taxes payable		588,443		420,066
Deferred income taxes		25,000		21,000
Total current liabilities		10,297,396		7,256,733
Borrowings under line of credit		4,437,446		3,000,000
Loans payable, net of current portion		247,438		256,692
Due to shareholders, net of current portion		-		514,623
Deferred income taxes		499,000		531,000
Total liabilities		15,481,280		11,559,048
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, 6,616,415 and 5,264,284 shares issued and outstanding at January 31, 2007 and April 30, 2006, respectively		662		526
Additional paid-in capital		44,413,431		33,525,130
Retained earnings (accumulated deficit)		2,268,570		(962,386	)
Total shareholders' equity		46,682,663		32,563,270
Total liabilities and shareholders' equity	$	62,163,943	$	44,122,318

Note 1: Certain reclassifications have been made to prior period financial statements to conform to current presentation.

4

Reconciliation of Non-GAAP Financial Measure (Unaudited)

Net Tangible Asset Value

Net tangible asset value is defined as (1) total assets, less (2) total liabilities, goodwill and customer lists. Our measure of net tangible asset value may not be comparable to similarly titled measures of other companies.

	January 31,			April 30,
		2007			2006
Total Assets, as reported	$	62,163,943		$	44,122,318
Deduct: Total liabilities		(15,481,280	)		(11,559,048	)
Goodwill		(19,019,452	)		(14,239,918	)
Customer lists		(1,426,805	)		(864,388	)
Net Tangible Asset Value	$	26,236,406		$	17,458,964

5