10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

Amendment No. 1

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the quarterly period ended July 31, 2012

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from _________ to __________

Commission File Number: 001-34643

WPCS INTERNATIONAL INCORPORATED

(Exact name of registrant as specified in its charter)

Delaware	98-0204758
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

One East Uwchlan Avenue

Suite 301

Exton, Pennsylvania 19341

(Address of principal executive offices) (zip code)

(610) 903-0400

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o  No x

As of September 12, 2012, there were 6,954,766 shares of registrant’s common stock outstanding.

1

EXPLANATORY NOTE

The purpose of this Amendment No. 1 to WPCS International Incorporated’s Quarterly Report on Form 10-Q for the quarterly period ended July 31, 2012, filed with the Securities and Exchange Commission on September 14, 2012  (the “Form 10-Q”), is solely to furnish Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T. Exhibit 101 to this report provides the consolidated financial statements and related notes from the Form 10-Q formatted in XBRL (eXtensible Business Reporting Language).

No other changes have been made to the Form 10-Q. This Amendment No. 1 to the Form 10-Q speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the original Form 10-Q.

Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

Item 6. Exhibits

31.01	Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.†
31.02	Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.†
32.01	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†
101 INS	XBRL Instance Document
101 SCH	XBRL Taxonomy Extension Schema Document
101 CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101 LAB	XBRL Taxonomy Extension Label Linkbase Document
101 PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101 DEF	XBRL Taxonomy Extension Definition Linkbase Document

† Incorporate by reference to the Quarterly Report on Form 10-Q for the period ended July 31, 2012, filed by WPCS International Incorporated on September 14, 2012.

2

Pursuant to the requirements of the Securities 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
Date: October 12, 2012	By:	/s/ JOSEPH HEATER
		Joseph Heater
		Chief Financial Officer

3

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SEGMENT REPORTING (Details Textual) (USD $)	3 Months Ended
	Jul. 31, 2012	Jul. 31, 2011
Specialty Communication [Member] | China Operations [Member]
Segment Reporting Information, Revenue for Reportable Segment	$ 1,031,000	$ 1,300,000
Segment Reporting Information, Net Assets	847,000	854,000
Noncontrolling Interest, Ownership Percentage by Parent	60.00%	60.00%
Wireless Communication [Member] | Australia Operations [Member]
Segment Reporting Information, Revenue for Reportable Segment	2,156,000	3,283,000
Segment Reporting Information, Net Assets	$ 2,816,000	$ 2,697,000

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COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS (Details) (USD $)	Jul. 31, 2012	Apr. 30, 2012
Costs incurred on uncompleted contracts	$ 78,067,151	$ 76,682,610
Provision for loss on uncompleted contracts	(247,769)	(1,886,896)
Estimated contract (loss) profit	(528,384)	2,242,232
Cost and Earnings of Uncompleted Contracts	77,290,998	77,037,946
Less: billings to date	77,429,115	79,291,760
Total	(138,117)	(2,253,814)
Costs and estimated earnings in excess of billings on uncompleted contracts	2,310,399	1,340,379
Billings in excess of costs and estimated earnings on uncompleted contracts	(2,448,516)	(3,594,193)
Total	$ (138,117)	$ (2,253,814)

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FAIR VALUE MEASUREMENTS (Table)

3 Months Ended

Jul. 31, 2012

Fair Value Measurements

Fair Value Measurements, Nonrecurring

The following table sets forth the assets and liabilities measured at fair value on a nonrecurring basis, by input level, in the consolidated balance sheet at July 31, 2011:

Balance Sheet Location	Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		July 31, 2011 Total
Liabilities:
Acquisition-related contingent consideration	$	-	$	-	$	1,049,011	$	1,049,011

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DISCONTINUED OPERATIONS (Details) (USD $)	3 Months Ended
	Jul. 31, 2012	Jul. 31, 2011
REVENUE	$ 4,901,501	$ 6,803,412
COSTS AND EXPENSES:
Cost of revenue	4,088,400	5,365,943
Selling, general and administrative expenses	1,291,164	1,898,584
Depreciation and amortization	101,750	165,659
Disposal Group, Including Discontinued Operation, Operating Expense	5,481,314	7,430,186
OPERATING LOSS FROM DISCONTINUED OPERATIONS	(579,813)	(626,774)
Interest expense	5,315	139
Loss from discontinued operations before income tax provision (benefit)	(585,128)	(626,913)
Income tax provision (benefit)	54,164	(438,228)
Loss from discontinued operations, net of tax	(639,292)	(188,685)
Gain from disposal	2,324,631	0
TOTAL INCOME (LOSS) FROM DISCONTINUED OPERATIONS	$ 1,685,339	$ (188,685)

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SHAREHOLDERS' EQUITY (Details Textual) (USD $)	3 Months Ended				0 Months Ended		1 Months Ended		3 Months Ended	1 Months Ended		3 Months Ended		3 Months Ended				3 Months Ended				3 Months Ended
	Jul. 31, 2012	Jul. 31, 2011	Apr. 30, 2012	Apr. 15, 2010 Shelf Registration [Member]	Mar. 08, 2010 Stockholder Rights Plan [Member]	Mar. 08, 2010 Stockholder Rights Plan [Member] Series D Preferred Stock [Member]	Apr. 30, 2006 Special Situations Fund [Member]	Jan. 30, 2006 Special Situations Fund [Member]	Jul. 31, 2012 Special Situations Fund [Member]	Jan. 30, 2006 Minimum [Member] Special Situations Fund [Member]	Jan. 30, 2006 Maximum [Member] Special Situations Fund [Member]	Jul. 31, 2012 Incentive Stock Plan 2007 [Member]	Sep. 30, 2006 Incentive Stock Plan 2007 [Member]	Jul. 31, 2012 Incentive Stock Plan 2007 [Member] Minimum [Member]	Jul. 31, 2012 Incentive Stock Plan 2007 [Member] Maximum [Member]	Jul. 31, 2012 Incentive Stock Plan 2006 [Member]	Sep. 30, 2005 Incentive Stock Plan 2006 [Member]	Jul. 31, 2012 Incentive Stock Plan 2006 [Member] Minimum [Member]	Jul. 31, 2012 Incentive Stock Plan 2006 [Member] Maximum [Member]	Jul. 31, 2012 Stock Option Plan 2002 [Member]	Mar. 31, 2003 Stock Option Plan 2002 [Member]	Jul. 31, 2012 Stock Option Plan 2002 [Member] Minimum [Member]	Jul. 31, 2012 Stock Option Plan 2002 [Member] Maximum [Member]
Common Stock, Capital Shares Reserved for Future Issuance				2,314,088									400,000				400,000				416,667
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period														1 year	3 years			1 year	3 years			1 year	3 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Contractual Term												5 years				5 years				5 years
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Outstanding Options												176,500				1,000				49,936
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Exercise Price																$ 6.33
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit												$ 2.37								$ 0.84
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant												211,000				327,424				224,214
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures	10,000
Stock-based compensation	$ 7,526	$ 20,288
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Stock Options	7,000
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition	7 months
Stock Sold by Former Stockholder in Violation of Securities Exchange Act								143,120
Stock Sold by Former Stockholder in Violation of Securities Exchange Act										$ 9.18	$ 12.62
Stock Purchased by Former Stockholder in Violation of Securities Exchange Act							666,468
Price per Common Stock Purchased by Former Stockholder in Violation of Securities Exchange Act							$ 7.00
Beneficial Ownership of Common Stock							more than 10%
Amount Agreed to be Settled to Company									529,280
Legal Fees									272,539
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit												$ 6.33								$ 10.25
Section 16(b) settlement	$ 254,361								$ 254,361
Purchase Of Stock Description						one one-thousandth (1/1000th)
Preferred stock, par value	$ 0.0001		$ 0.0001	$ 0.0001		$ 0.0001
Stock Purchase Price						$ 15.00
Accumulating Beneficial Ownership					15% or more

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $)	3 Months Ended
	Jul. 31, 2012	Jul. 31, 2011
OPERATING ACTIVITIES :
Consolidated net income (loss)	$ 993,154	$ (19,221)
Adjustments to reconcile consolidated net income (loss) to net cash (used in) provided by operating activities:
Depreciation and amortization	463,464	604,832
Gain from disposition of operations	(2,324,631)	0
Stock-based compensation	7,526	20,288
Provision for doubtful accounts	(23,495)	54,059
Amortization of debt issuance costs	30,092	0
Change in the fair value of acquisition-related contingent consideration	0	43,068
Gain on sale of fixed assets	(16,147)	(14,658)
Deferred income taxes	(81,924)	(26,080)
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable	3,449,841	(3,351,665)
Costs and estimated earnings in excess of billings on uncompleted contracts	(1,151,709)	125,843
Inventory	(103,164)	366,610
Prepaid expenses and other current assets	(338,784)	(173,491)
Income taxes receivable	77,779	(52,507)
Prepaid taxes	39,931	(7,929)
Other assets	254,391	482
Accounts payable and accrued expenses	(907,324)	3,330,157
Billings in excess of costs and estimated earnings on uncompleted contracts	(1,112,013)	124,699
Deferred revenue	543,822	16,755
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES	(199,191)	1,041,242
INVESTING ACTIVITIES:
Acquisition of property and equipment, net	(205,881)	(116,473)
Proceeds from sale of operations, net of transaction costs	4,722,437	0
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	4,516,556	(116,473)
FINANCING ACTIVITIES:
Net proceeds from Section 16(b) settlement	222,413	0
Debt issuance costs	(27,220)	0
Repayments under lines of credit	(4,964,140)	(1,439,023)
Repayments under loans payable, net	(39,858)	(9,718)
Borrowings from (repayments to) joint venture partner, net	141,704	(304,623)
Repayments of capital lease obligations	(10,033)	(16,354)
Borrowings under other payable	793,927	0
NET CASH USED IN FINANCING ACTIVITIES	(3,883,207)	(1,769,718)
Effect of exchange rate changes on cash	12,479	29,165
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	446,637	(815,784)
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD	811,283	4,879,106
CASH AND CASH EQUIVALENTS, END OF THE PERIOD	$ 1,257,920	$ 4,063,322

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DISCONTINUED OPERATIONS (Details 1) (USD $)	Apr. 30, 2012
ASSETS
Cash and cash equivalents	$ 2,432
Accounts receivable, net of allowance of $134,929 at April 30, 2012	5,837,341
Costs and estimated earnings in excess of billings on uncompleted contracts	183,760
Inventory	1,416,773
Prepaid expenses and other current assets	82,971
Prepaid income taxes	47,920
Total current assets	7,571,197
PROPERTY AND EQUIPMENT, net	1,013,377
OTHER ASSETS	51,478
Total assets	8,636,052
LIABILITIES AND EQUITY
Current portion of loans payable	99,002
Income taxes payable	2,000
Accounts payable and accrued expenses	4,754,099
Billings in excess of costs and estimated earnings on uncompleted contracts	33,103
Deferred revenue	498,934
Total current liabilities	5,387,138
Loans payable, net of current portion	172,222
Total liabilities	5,559,360
Total net assets	$ 3,076,692

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) (USD $)					3 Months Ended				3 Months Ended
	Jul. 31, 2012	Apr. 30, 2012	Jul. 31, 2012 Customer Lists [Member]	Apr. 30, 2012 Customer Lists [Member]	Jul. 31, 2012 Customer Lists [Member] Maximum [Member]	Jul. 31, 2012 Customer Lists [Member] Minimum [Member]	Jul. 31, 2012 Contract Backlog [Member]	Apr. 30, 2012 Contract Backlog [Member]	Jul. 31, 2012 Contract Backlog [Member] Maximum [Member]	Jul. 31, 2012 Contract Backlog [Member] Minimum [Member]
Other intangible assets, Gross			$ 1,982,303	$ 2,961,799			$ 1,038,932	$ 1,034,787
Less accumulated amortization			(1,628,575)	(2,579,895)			(1,038,450)	(1,033,839)
Other intangible assets, Net	$ 354,210	$ 382,852	$ 353,728	$ 381,904			$ 482	$ 948
Estimated useful life (years)					9 years	3 years			3 years	1 year

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $)	3 Months Ended
	Jul. 31, 2012	Jul. 31, 2011
Beginning balance, goodwill, May 1, 2012	$ 1,930,826	$ 2,038,978
Foreign currency translation adjustments	32,495
Ending balance, goodwill, July 31, 2012	$ 1,963,321	$ 2,038,978

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DISCONTINUED OPERATIONS (Details Textual) (USD $)		12 Months Ended	3 Months Ended
	Apr. 30, 2012	Apr. 30, 2011 St Louis and Sarasota Operations [Member]	Jul. 31, 2012 Hartford and Lakewood Operations [Member]	Jul. 25, 2012 Hartford and Lakewood Operations [Member]
Cash and cash equivalents	$ 2,432	$ 2,000,000		$ 4,900,000
Line of Credit Facility, Decrease, Repayments		2,000,000
Assets Of Disposal Group, Including Discontinued Operation	8,636,052			5,500,000
Escrow Deposits				600,000
Line of Credit Facility, Amount Outstanding				4,022,320
Deposits Assets, Current				877,680
Purchase Price Into Escrow Pending Assignment				350,000
Remaining Purchase Price Escrowed For Adjustments				250,000
Disposal Group, Including Discontinued Operation Selling Expense			$ 55,000

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) (USD $)	3 Months Ended
	Jul. 31, 2012	Jul. 31, 2011
Basic income (loss) per share computation
Net income (loss) from continuing operations, net of noncontrolling interest	$ (692,732)	$ 154,008
Basic weighted average shares outstanding	6,954,766	6,954,766
Basic net income (loss) per common share from continuing operations	$ (0.10)	$ 0.02
Diluted income (loss) per share computation
Net income (loss) from continuing operations, net of noncontrolling interest	$ (692,732)	$ 154,008
Basic weighted average shares outstanding	6,954,766	6,954,766
Incremental shares from assumed conversion:
Assumed exercise of stock options	0	9,445
Diluted weighted average shares	6,954,766	6,964,211
Diluted net income (loss) per common share from continuing operations	$ (0.10)	$ 0.02

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) (USD $)	3 Months Ended
	Jul. 31, 2012	Jul. 31, 2011
Balance, Noncontrolling Interest beginning of period	$ 1,117,322	$ 1,038,428
Net (loss) income attributable to noncontrolling interest	(547)	15,456
Other comprehensive (loss) income attributable to noncontrolling interest	(14,335)	5,373
Balance, Noncontrolling Interest end of period	$ 1,102,440	$ 1,059,257

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CONDENSED CONSOLIDATED STATEMENT OF EQUITY (Unaudited) (USD $)	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	WPCS Equity [Member]	Noncontrolling Interest [Member]	Total
Balance at Apr. 30, 2012	$ 0	$ 695	$ 50,477,543	$ (47,143,662)	$ 1,433,066	$ 4,767,642	$ 1,117,322	$ 5,884,964
Balance (in shares) at Apr. 30, 2012	0	6,954,766
Stock-based compensation			7,526			7,526		7,526
Section 16(b) settlement			254,361			254,361		254,361
Other comprehensive income (loss)					38,023	38,023	(14,335)	23,688
Net loss attributable to noncontrolling interest							(547)	(547)
Net income attributable to WPCS				993,701		993,701		993,701
Balance at Jul. 31, 2012	$ 0	$ 695	$ 50,739,430	$ (46,149,961)	$ 1,471,089	$ 6,061,253	$ 1,102,440	$ 7,163,693
Balance (in shares) at Jul. 31, 2012	0	6,954,766

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) (USD $)	3 Months Ended
	Jul. 31, 2012	Jul. 31, 2011
Amortization of Intangible Assets	$ 35,099	$ 40,890
Provision For Anticipated Losses	$ 247,769	$ 317,469
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	227,436	272,938
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	227,436	199,538

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FAIR VALUE MEASUREMENTS (Details) (USD $)	Jul. 31, 2011
Liabilities, Fair Value Disclosure [Abstract]
Business Acquisition, Contingent Consideration, at Fair Value	$ 1,049,011
Fair Value, Inputs, Level 1 [Member]
Liabilities, Fair Value Disclosure [Abstract]
Business Acquisition, Contingent Consideration, at Fair Value	0
Fair Value, Inputs, Level 2 [Member]
Liabilities, Fair Value Disclosure [Abstract]
Business Acquisition, Contingent Consideration, at Fair Value	0
Fair Value, Inputs, Level 3 [Member]
Liabilities, Fair Value Disclosure [Abstract]
Business Acquisition, Contingent Consideration, at Fair Value	$ 1,049,011

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $)	Jul. 31, 2012	Apr. 30, 2012
ASSETS
Cash and cash equivalents	$ 1,257,920	$ 811,283
Accounts receivable, net of allowance of $1,618,454 and $1,794,729 at July 31, 2012 and April 30, 2012, respectively	13,776,221	22,343,304
Costs and estimated earnings in excess of billings on uncompleted contracts	2,310,399	1,340,379
Inventory	0	1,475,266
Prepaid expenses and other current assets	2,356,016	2,142,191
Prepaid income taxes	48,586	137,279
Deferred tax assets	396,391	307,550
Total current assets	20,145,533	28,557,252
PROPERTY AND EQUIPMENT, net	3,173,186	4,309,450
OTHER INTANGIBLE ASSETS, net	354,210	382,852
GOODWILL	1,963,321	1,930,826
DEFERRED TAX ASSETS	247,362	243,999
OTHER ASSETS	69,776	371,020
Total assets	25,953,388	35,795,399
LIABILITIES AND EQUITY
Current portion of loans payable	44,124	143,514
Borrowings under line of credit	0	4,964,140
Current portion of capital lease obligations	5,432	15,465
Accounts payable and accrued expenses	11,128,316	16,669,621
Billings in excess of costs and estimated earnings on uncompleted contracts	2,448,516	3,594,193
Deferred revenue	631,716	790,270
Due joint venture partner	3,412,434	3,314,708
Other payable	793,927	0
Income taxes payable	268,816	194,963
Total current liabilities	18,733,281	29,686,874
Loans payable, net of current portion	56,414	223,561
Total liabilities	18,789,695	29,910,435
COMMITMENTS AND CONTINGENCIES
WPCS EQUITY:
Preferred stock - $0.0001 par value, 5,000,000 shares authorized, none issued	0	0
Common stock - $0.0001 par value, 25,000,000 shares authorized, 6,954,766 shares issued and outstanding at July 31, 2012 and April 30, 2012	695	695
Additional paid-in capital	50,739,430	50,477,543
Accumulated deficit	(46,149,961)	(47,143,662)
Accumulated other comprehensive income on foreign currency translation	1,471,089	1,433,066
Total WPCS equity	6,061,253	4,767,642
Noncontrolling interest	1,102,440	1,117,322
Total equity	7,163,693	5,884,964
Total liabilities and equity	$ 25,953,388	$ 35,795,399

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COMMITMENTS AND CONTINGENCIES (Details Textual) (USD $)	3 Months Ended
	Jul. 31, 2012
Advances For Payment Of Labor and Labor-Related Benefits	$ 793,927
Cost Of Cooper Project	15,100,000
Maximum Advances Request	888,000
Current and Future Billings Value	2,852,346
Repayments of Short-term Debt	793,927
Cooper Project [Member] | Bonds [Member]
Repayments of Short-term Debt	4,300,000
Other Project [Member] | Bonds [Member]
Repayments of Short-term Debt	723,000
August 3, 2012 [Member]
Debt Instrument, Periodic Payment	397,000
September 7, 2012 [Member]
Debt Instrument, Periodic Payment	$ 396,927

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (USD $)	3 Months Ended
	Jul. 31, 2012	Jul. 31, 2011
Consolidated net income (loss)	$ 993,154	$ (19,221)
Other comprehensive income - foreign currency translation adjustments, net of tax effects of $0, and $6,919, respectively	23,688	819
Comprehensive income (loss)	1,016,842	(18,402)
Comprehensive income (loss) attributable to noncontrolling interest	(14,882)	20,829
Comprehensive income (loss) attributable to WPCS	$ 1,031,724	$ (39,231)

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DEBT (Details Textual) (USD $)	1 Months Ended	3 Months Ended			1 Months Ended		3 Months Ended					1 Months Ended		1 Months Ended
	Jan. 31, 2012	Jul. 31, 2012	Apr. 30, 2012	Jul. 31, 2012 Taian Gas Group [Member]	Jan. 31, 2012 Subsidiaries [Member]	Jan. 31, 2012 WPCS Australia Pty Ltd [Member]	Jul. 31, 2012 September 30, 2012 [Member] Taian Gas Group [Member]	Jul. 31, 2012 August 31, 2012 [Member]	Jul. 31, 2012 September 12, 2012 [Member]	Jul. 31, 2012 Maximum [Member]	Jul. 31, 2012 Minimum [Member]	Jan. 31, 2012 Loan Processing Fee [Member]	May 03, 2012 Revolving Credit Facility [Member]	Aug. 31, 2012 Revolving Credit Facility [Member] Criteria One [Member]	Aug. 31, 2012 Revolving Credit Facility [Member] Criteria Two [Member]	Jan. 31, 2012 Standby Letters Of Credit [Member]
Line of Credit Facility, Maximum Borrowing Capacity		$ 1,759,119						$ 2,000,000	$ 1,759,119				$ 6,500,000			$ 2,000,000
Due joint venture partner		3,412,434	3,314,708	3,412,434
Repayments of Related Party Debt							2,357,250
Pledged Percentage Of Ownership					100.00%	65.00%
Fees and Expenses												409,177
Line of Credit Facility, Commitment Fee Amount	60,000
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage	0.375%
Line of Credit Facility, Collateral Fees, Amount	1,000
Debt Instrument, Description		Principal covenants include (a) Fixed Charge Coverage Ratio of not less than 1.2 to 1.0, measured as of April 30, 2012 and as of each fiscal quarter end thereafter, in each case on a trailing two (2) quarter basis; and (b) Leverage Ratio of not more than 1.75 to 1.0, measured as of each fiscal quarter end. Due to the operating losses for the quarters ended April 30, 2012 and July 31, 2012, the Company did not meet the Fixed Charge Coverage Ratio of 1.2 to 1.0 for the two quarters ended April 30, 2012 and July 31, 2012, and the Leverage Ratio of not more than 1.75 to 1.0 at April 30, 2012, and the Company is currently in default under the Credit Agreement.
Letter Of Credit Face Amount Percentage	2.25%
Line of Credit Facility, Expiration Date	Jan. 27, 2015
Line of Credit Facility, Interest Rate Description	Prime Rate (3.25%) plus 2.00%, or 5.25%
Line of Credit Facility, Amount Outstanding									204,619
Line of Credit Facility, Remaining Borrowing Capacity									1,554,500
Percentage Of Termination Fee Prior To First Anniversary		3.00%
Percentage Of Termination Fee After First Anniversary Prior To Expiration		1.00%
Current portion of capital lease obligations		105,970
Loans Payable and Capital Lease Obligations Interest Rate										12.70%	0.00%
Debt Instrument, Interest Rate at Period End		5.81%		5.81%
Accrued Interest and Working Capital Loans				$ 1,055,184
Line of Credit Facility, Description														(i) $2,000,000 less the letter of credit amount, or	(ii) the sum of (a) 80% of Eligible Accounts Receivable, minus (c) the letter of credit amount minus (d) such reserves, in such amounts and with respect to such matters, as Sovereign may deem reasonably proper and necessary from time to time at its own discretion, which is currently $500,000.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Jul. 31, 2012

Summary of Significant Accounting Policies

Schedule of Goodwill

Changes in goodwill consist of the following during the three months ended July 31, 2012:

	Total
Beginning balance, May 1, 2012	$	1,930,826
Foreign currency translation adjustments		32,495
Ending balance, July 31, 2012	$	1,963,321

Schedule of Finite-Lived Intangible Assets

Other intangible assets consist of the following at July 31, 2012 and April 30, 2012:

	Estimated useful life		July 31,			April 30,
	(years)		2012			2012
Customer list		3-9	$	1,982,303		$	2,961,799
Less accumulated amortization				(1,628,575	)		(2,579,895	)
				353,728			381,904
Contract backlog		1-3		1,038,932			1,034,787
Less accumulated amortization				(1,038,450	)		(1,033,839	)
				482			948
Totals			$	354,210		$	382,852

Schedule of Earnings Per Share, Basic and Diluted

The table below presents the computation of basic and diluted net income (loss) per common share from continuing operations for the three months ended July 31, 2012 and 2011, respectively:

Basic income (loss) per share computation	Three Months Ended
	July 31,
	2012			2011
Numerator:
Net income (loss) from continuing operations, net of noncontrolling interest	$	(692,732	)	$	154,008
Denominator:
Basic weighted average shares outstanding		6,954,766			6,954,766
Basic net income (loss) per common share from continuing operations	$	(0.10	)	$	0.02

Diluted income (loss) per share computation	Three Months Ended
	July 31,
	2012			2011
Numerator:
Net income (loss) from continuing operations, net of noncontrolling interest	$	(692,732	)	$	154,008
Denominator:
Basic weighted average shares outstanding		6,954,766			6,954,766
Incremental shares from assumed conversion:
Assumed exercise of stock options		-			9,445
Diluted weighted average shares		6,954,766			6,964,211
Diluted net income (loss) per common share from continuing operations	$	(0.10	)	$	0.02

Schedule of Noncontrolling Interest

Noncontrolling interest for the three months ended July 31, 2012 and 2011 consists of the following:

	Three Months Ended
	July 31,
	2012			2011
Balance, beginning of period	$	1,117,322		$	1,038,428
Net (loss) income attributable to noncontrolling interest		(547	)		15,456
Other comprehensive (loss) income attributable to noncontrolling interest		(14,335	)		5,373
Balance, end of period	$	1,102,440		$	1,059,257

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RELATED PARTY TRANSACTIONS (Details Textual) (USD $)	3 Months Ended		3 Months Ended
	Jul. 31, 2012	Apr. 30, 2012	Jul. 31, 2012 Trenton Operations [Member]	Jul. 31, 2011 Trenton Operations [Member]	Jul. 31, 2012 Pride Group Pty Limited [Member]	Jul. 31, 2011 Pride Group Pty Limited [Member]	Jul. 31, 2012 Taian Gas Group and Subsidiaries [Member]	Jul. 31, 2011 Taian Gas Group and Subsidiaries [Member]
Operating Leases, Rent Expense			$ 12,600	$ 17,400	$ 15,543	$ 15,543
Related Party Transaction, Date	Jun. 30, 2012
Revenue from Related Parties							0	689,235
Accounts Receivable, Net, Current	$ 13,776,221	$ 22,343,304					$ 617,661	$ 425,975

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SEGMENT REPORTING (Table)

3 Months Ended

Jul. 31, 2012

Segment Reporting

Schedule of Segment Reporting Information, by Segment

Segment results for the three months ended July 31, 2012 and 2011 are as follows:

	As of and for the Three Months Ended July 31, 2012													As of and for the Three Months Ended July 31, 2011
	Corporate			Wireless Communications			Specialty Construction		Electrical Power		Total			Corporate			Wireless Communications		Specialty Construction		Electrical Power		Total
Revenue	$	-		$	4,614,811		$	1,030,800	$	7,798,806	$	13,444,417		$	-		$	7,098,539	$	1,300,129	$	10,217,423	$	18,616,091
Depreciation and amortization	$	10,993		$	94,803		$	174,691	$	81,227	$	361,714		$	16,373		$	128,945	$	181,999	$	111,856	$	439,173
Income (loss) from continuing operations before income taxes	$	(866,461	)	$	(40,308	)	$	18,831	$	330,282	$	(557,656	)	$	(910,609	)	$	861,110	$	72,926	$	557,925	$	581,352
Goodwill	$	-		$	1,963,321		$	-	$	-	$	1,963,321		$	-		$	2,038,978	$	-	$	-	$	2,038,978
Total assets	$	786,681		$	9,088,501		$	7,497,749	$	8,580,457	$	25,953,388		$	8,922,917		$	13,041,863	$	10,761,219	$	13,606,674	$	46,332,673
Additions of property and equipment	$	-		$	39,820		$	136,343	$	58,850	$	235,013		$	2,662		$	23,737	$	65,567	$	15,306	$	107,272

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) (USD $)	3 Months Ended
	Jul. 31, 2012	Jul. 31, 2011
Tax effect of foreign currency translation adjustments	$ 0	$ 6,919

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Jul. 31, 2012	Apr. 30, 2012
Allowance for accounts receivable	$ 1,618,454	$ 1,794,729
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	25,000,000	25,000,000
Common stock, shares issued	6,954,766	6,954,766
Common stock, shares outstanding	6,954,766	6,954,766

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FAIR VALUE MEASUREMENTS

3 Months Ended

Jul. 31, 2012

Fair Value Measurements

FAIR VALUE MEASUREMENTS

NOTE 8 - FAIR VALUE MEASUREMENTS

As defined by the Accounting Standard Codification (ASC), fair value measurements and disclosures establish a hierarchy that prioritizes fair value measurements based on the type of inputs used for the various valuation techniques (market approach, income approach and cost approach).  The levels of hierarchy are described below:

·  Level 1:  Observable inputs such as quoted market prices in active markets for identical assets or liabilities.

·  Level 2:  Inputs other than quoted market prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets, such as interest rates and yield curves that are observable at commonly-quoted intervals.

·  Level 3:  Unobservable inputs that reflect the reporting entity’s own assumptions, as there is little, if any, related market activity.

The Company determined the fair value of the obligation to pay the contingent consideration based on the probability-weighted income approach, using Level 3 measurement as defined in the ASC.  The Level 3 measurement is based on significant inputs not observable in the market. These measurements included an estimated discount rate range of 18.02%, future revenue growth rate of 10%, EBIT margins ranging from 7.5% to 13.32%, and weighted probability of EBIT achievement ranging from 0% to 100%.  The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of assets and liabilities and their placement within the fair value hierarchy.

The following table sets forth the assets and liabilities measured at fair value on a nonrecurring basis, by input level, in the consolidated balance sheet at July 31, 2011:

Balance Sheet Location	Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		July 31, 2011 Total
Liabilities:
Acquisition-related contingent consideration	$	-	$	-	$	1,049,011	$	1,049,011

Following the first year contingent payment, and the recording of $43,068 of additional non-cash expense for the three months ended July 31, 2011 for the change in the fair value of the contingent consideration from the present value of the future payments of this obligation, the fair value of the acquisition-related contingent consideration was $1,049,011 as of July 31, 2011. The Level 3 measurements included an estimated discount rate of 18.02%, future revenue growth rate of 10%, earnings before interest and taxes (EBIT) margins ranging from 7.5% to 13.32%, and weighted probability of EBIT achievement ranging from 0% to 100%.

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DOCUMENT AND ENTITY INFORMATION	3 Months Ended
	Jul. 31, 2012	Sep. 12, 2012
Entity Registrant Name	WPCS INTERNATIONAL INC
Entity Central Index Key	0001086745
Current Fiscal Year End Date	--04-30
Entity Filer Category	Smaller Reporting Company
Trading Symbol	wpcs
Entity Common Stock, Shares Outstanding		6,954,766
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jul. 31, 2012
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2013

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DISCONTINUED OPERATIONS

3 Months Ended

Jul. 31, 2012

Discontinued Operations

DISCONTINUED OPERATIONS

NOTE 9 - DISCONTINUED OPERATIONS

St. Louis and Sarasota Operations Common Stock Sales

Effective September 1, 2011, the Company entered into a Securities Purchase Agreement and Amendment No. 1 to the Escrow Agreement with Multiband, Inc. (Multiband) traded under the NASDAQ symbol MBND, for the acquisition by Multiband of the common stock of the Company’s former wholly-owned subsidiaries, the St. Louis and Sarasota Operations, for $2,000,000 in cash.  The $2,000,000 in proceeds was used to reduce the outstanding borrowings under a previous loan agreement with BOA.

Hartford and Lakewood Operations Asset Sales

On July 25, 2012, the Company and the Hartford and Lakewood Operations entered into an asset purchase agreement (the Purchase Agreement), pursuant to which the Hartford and Lakewood Operations sold substantially all of their assets to two newly-created subsidiaries of Kavveri Telecom Products Limited (Kavveri) for a purchase price of $5.5 million in cash, subject to adjustment, and the assumption of their various liabilities.  At closing, the Company received $4.9 million in cash, with the remaining $600,000 of the purchase price to be placed into escrow pursuant to the Purchase Agreement. The Company used the proceeds from this sale to repay the full amount outstanding under the Credit Agreement of $4,022,320 as of July 25, 2012.  The difference of $877,680 was deposited in its operating cash account.

The parties agreed to place $350,000 of the purchase price into escrow pending assignment of certain contracts post-closing, with the Company receiving those funds upon successful assignment of the contracts. The remaining $250,000 is to be escrowed for purposes of satisfying certain adjustments to the purchase price based on a final net asset valuation to be completed after closing as well as repurchase obligations of certain delinquent accounts receivable. No later than three days after the final determination of the net asset valuation, the purchasers are required to deposit the $600,000 into escrow. On September 4, 2012, the purchasers provided the Company with their net asset valuation as of the closing date.  The Company is currently evaluating the net asset valuation within its 30 day review period to approve or disagree with such calculations. If the parties disagree, they have 20 days to resolve any differences, and if they are unable to come to an agreement, the matter will then be submitted to one or more independent, nationally-recognized accounting firms for final determination.

The Company has reported the financial activity of these four operations as discontinued operations for all periods presented.  A summary of the operating results for the discontinued operations is as follows:

	Three Months Ended
	July 31,
	2012			2011
REVENUE	$	4,901,501		$	6,803,412
COSTS AND EXPENSES:
Cost of revenue		4,088,400			5,365,943
Selling, general and administrative expenses		1,291,164			1,898,584
Depreciation and amortization		101,750			165,659
		5,481,314			7,430,186
OPERATING LOSS FROM DISCONTINUED OPERATIONS		(579,813	)		(626,774	)
Interest expense		5,315			139
Loss from discontinued operations before income tax provision (benefit)		(585,128	)		(626,913	)
Income tax provision (benefit)		54,164			(438,228	)
Loss from discontinued operations, net of tax		(639,292	)		(188,685	)
Gain from disposal		2,324,631			-
TOTAL INCOME (LOSS) FROM DISCONTINUED OPERATIONS	$	1,685,339		$	(188,685	)

The Company incurred approximately $55,000 of expenses directly associated with the asset sales of the Hartford and Lakewood Operations.

There were no assets or liabilities included in the condensed consolidated balance sheet for the Hartford and Lakewood Operations at July 31, 2012.  The major classes of assets and liabilities included in the condensed consolidated balance sheets at April 30, 2012 for the Hartford and Lakewood Operations as discontinued operations were as follows:

	April 30, 2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	2,432
Accounts receivable, net of allowance of $134,929 at April 30, 2012		5,837,341
Costs and estimated earnings in excess of billings on uncompleted contracts		183,760
Inventory		1,416,773
Prepaid expenses and other current assets		82,971
Prepaid income taxes		47,920
Total current assets		7,571,197
PROPERTY AND EQUIPMENT, net		1,013,377
OTHER ASSETS		51,478
Total assets		8,636,052
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current portion of loans payable		99,002
Income taxes payable		2,000
Accounts payable and accrued expenses		4,754,099
Billings in excess of costs and estimated earnings on uncompleted contracts		33,103
Deferred revenue		498,934
Total current liabilities		5,387,138
Loans payable, net of current portion		172,222
Total liabilities		5,559,360
Total net assets	$	3,076,692

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $)	3 Months Ended
	Jul. 31, 2012	Jul. 31, 2011
REVENUE	$ 13,444,417	$ 18,616,091
COSTS AND EXPENSES:
Cost of revenue	10,514,076	14,207,243
Selling, general and administrative expenses	3,010,966	3,257,938
Depreciation and amortization	361,714	439,173
Change in fair value of acquisition-related contingent consideration	0	43,068
Costs and Expenses	13,886,756	17,947,422
OPERATING (LOSS) INCOME	(442,339)	668,669
OTHER EXPENSE (INCOME):
Interest expense	125,115	95,793
Interest income	(9,798)	(8,476)
(Loss) income from continuing operations before income tax provision	(557,656)	581,352
Income tax provision	134,529	411,888
(LOSS) INCOME FROM CONTINUING OPERATIONS	(692,185)	169,464
Discontinued operations:
Loss from operations of discontinued operations, net of tax of $54,164 and ($438,228), respectively	(639,292)	(188,685)
Gain from disposal	2,324,631	0
Income (loss) from discontinued operations, net of tax	1,685,339	(188,685)
CONSOLIDATED NET INCOME (LOSS)	993,154	(19,221)
Net (loss) income attributable to noncontrolling interest	(547)	15,456
NET INCOME (LOSS) ATTRIBUTABLE TO WPCS	$ 993,701	$ (34,677)
Basic and diluted net income (loss) per common share attributable to WPCS:
(Loss) income from continuing operations attributable to WPCS	$ (0.10)	$ 0.02
Income (loss) from discontinued operations attributable to WPCS	$ 0.24	$ (0.03)
Basic and diluted net income (loss) per common share attributable to WPCS	$ 0.14	$ (0.01)
Basic weighted average number of common shares outstanding	6,954,766	6,954,766
Diluted weighted average number of common shares outstanding	6,954,766	6,964,211

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COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

3 Months Ended

Jul. 31, 2012

Costs and Estimated Earnings on Uncompleted Contracts

COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

NOTE 3 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

The asset, “Costs and estimated earnings in excess of billings on uncompleted contracts”, represents revenue recognized in excess of amounts billed. The liability, “Billings in excess of costs and estimated earnings on uncompleted contracts”, represents billings in excess of revenue recognized. Costs and estimated earnings on uncompleted contracts consist of the following at July 31, 2012 and April 30, 2012:

	July 31, 2012			April 30, 2012
Costs incurred on uncompleted contracts	$	78,067,151		$	76,682,610
Provision for loss on uncompleted contracts		(247,769	)		(1,886,896	)
Estimated contract (loss) profit		(528,384	)		2,242,232
		77,290,998			77,037,946
Less: billings to date		77,429,115			79,291,760
Total	$	(138,117	)	$	(2,253,814	)
Costs and estimated earnings in excess of billings on uncompleted contracts	$	2,310,399		$	1,340,379
Billings in excess of costs and estimated earnings on uncompleted contracts		(2,448,516	)		(3,594,193	)
Total	$	(138,117	)	$	(2,253,814	)

Revisions in the estimated gross profits on contracts and contract amounts are made in the period in which circumstances requiring the revisions become known. During the three months ended July 31, 2012 and 2011, the effect of such revisions in estimated contract profits resulted in an increase to gross profits of approximately $459,000 (approximately $0.07 per common share) and $406,000 (approximately $0.06 per common share), respectively, from that which would have been reported had the revised estimates been used as the basis of recognition for contract profits in prior years. The increase in gross profit includes approved change orders received on one project in the Trenton Operations of approximately $736,000 for the three months ended July 31, 2012.

Although management believes it has established adequate procedures for estimating costs to complete open contracts, additional costs could occur on contracts prior to completion.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Jul. 31, 2012

Summary of Significant Accounting Policies

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of significant accounting policies consistently applied in the preparation of the accompanying unaudited condensed consolidated financial statements follows:

Principles of Consolidation

All significant intercompany transactions and balances have been eliminated in these condensed consolidated financial statements.

Cash and Cash Equivalents

Cash and cash equivalents include all cash and highly-liquid investments with a maturity at time of purchase of three months or less.

Accounts Receivable

Accounts receivable are due within contractual payment terms and are stated at amounts due from customers net of an allowance for doubtful accounts. Credit is extended based on evaluation of a customer's financial condition. Accounts outstanding longer than the contractual payment terms are considered past due. The Company determines an allowance by considering a number of factors, including the length of time trade accounts receivable are past due, our previous loss history, the customer's current ability to pay its obligation to the Company, and the condition of the general economy and the industry as a whole. The Company writes off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts.

Fair Value of Financial Instruments

The Company’s material financial instruments at July 31, 2012 and for which disclosure of estimated fair value is required by certain accounting standards consisted of cash and cash equivalents, accounts receivable, account payable, line of credit and loans payable. The fair values of cash and cash equivalents, accounts receivable, and account payable are equal to their carrying value because of their liquidity and short-term maturity. Management believes that the fair values of the line of credit and loans payable do not differ materially from their aggregate carrying values in that substantially all the obligations bear variable interest rates that are based on market rates or interest rates that are periodically adjustable to rates that are based on market rates.

Goodwill and Other Intangible Assets

Goodwill represents the amount by which the purchase prices of the Company's wholly-owned subsidiaries were in excess of the fair value of identifiable net assets as of the date of acquisition.  Other intangible assets have finite useful lives and are comprised of customer lists and backlog.

Goodwill is tested at least annually for impairment, and otherwise on an interim basis should events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. Determination of impairment requires the Company to compare the fair value of the business acquired (reporting unit) to its carrying value, including goodwill, of such business (reporting unit). If the fair value exceeds the carrying value, no impairment loss is recognized. However, if the carrying value of the reporting unit exceeds its fair value, the goodwill of the unit may be impaired. The amount, if any, of the impairment is then measured in the second step, based on the excess, if any, of the reporting unit’s carrying value of goodwill over its implied value.

The Company determines the fair value of the reporting units for purposes of this test primarily by using a discounted cash flow valuation technique. Significant estimates used in the valuation include estimates of future cash flows, both future short-term and long-term growth rates, and estimated cost of capital for purposes of arriving at a discount factor. The Company performs its annual impairment test at April 30 absent any interim impairment indicators. Significant adverse changes in general economic conditions could impact the Company's valuation of its reporting units. For the three months ended July 31, 2012, there were no interim impairment indicators.

The Company reviews its other intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  In performing a review for impairment, the Company compares the carrying value of the assets with their estimated future undiscounted cash flows from the use of the asset and eventual disposition. If the estimated undiscounted future cash flows are less than carrying value, an impairment loss is charged to operations based on the difference between the carrying amount and the fair value of the asset .

Changes in goodwill consist of the following during the three months ended July 31, 2012:

	Total
Beginning balance, May 1, 2012	$	1,930,826
Foreign currency translation adjustments		32,495
Ending balance, July 31, 2012	$	1,963,321

Other intangible assets consist of the following at July 31, 2012 and April 30, 2012:

	Estimated useful life		July 31,			April 30,
	(years)		2012			2012
Customer list		3-9	$	1,982,303		$	2,961,799
Less accumulated amortization				(1,628,575	)		(2,579,895	)
				353,728			381,904
Contract backlog		1-3		1,038,932			1,034,787
Less accumulated amortization				(1,038,450	)		(1,033,839	)
				482			948
Totals			$	354,210		$	382,852

Amortization expense of other intangible assets for the three months ended July 31, 2012 and 2011 was $35,099 and $40,890, respectively. There are no expected residual values related to these intangible assets.

Revenue Recognition

The Company generates its revenue by providing design-build engineering services for communications infrastructure. The Company’s design-build services report revenue pursuant to customer contracts that span varying periods of time. The Company reports revenue from contracts when persuasive evidence of an arrangement exists, fees are fixed or determinable, and collection is reasonably assured.

The Company records revenue and profit from long-term contracts on a percentage-of-completion basis, measured by the percentage of contract costs incurred to date to the estimated total costs for each contract.  Contracts in process are valued at cost plus accrued profits less earned revenues and progress payments on uncompleted contracts. Contract costs include direct materials, direct labor, third party subcontractor services and those indirect costs related to contract performance. Contracts are generally considered substantially complete when engineering is completed and/or site construction is completed.

The Company has numerous contracts that are in various stages of completion. Such contracts require estimates to determine the appropriate cost and revenue recognition. Cost estimates are reviewed monthly on a contract-by-contract basis, and are revised periodically throughout the life of the contract such that adjustments to profit resulting from revisions are made cumulative to the date of the revision. Significant management judgments and estimates, including the estimated cost to complete projects, which determines the project’s percent complete, must be made and used in connection with the revenue recognized in the accounting period. Current estimates may be revised as additional information becomes available. If estimates of costs to complete long-term contracts indicate a loss, provision is made currently for the total loss anticipated. For the three months ended July 31, 2012 and 2011, the Company has provided aggregate loss provisions of approximately $247,769 and $317,469 related to anticipated losses on long-term contracts.

The length of the Company’s contracts varies. Assets and liabilities related to long-term contracts are included in current assets and current liabilities in the accompanying balance sheets as they will be liquidated in the normal course of contract completion, although this may require more than one year.

The Company records revenue and profit from short-term contracts for the China Operations under the completed contract method, whereas income is recognized only when a contract is completed or substantially completed. Accordingly, during the period of performance, billings and costs are accumulated on the balance sheet, but no revenue or income is recorded before completion or substantial completion of the work.  The Company’s decision is based on the short-term nature of the work performed.

The Company also recognizes certain revenue from short-term contracts when the services have been provided to the customer.  For maintenance contracts, revenue is recognized ratably over the service period.

Income Taxes

The Company accounts for income taxes pursuant to the asset and liability method which requires deferred income tax assets and liabilities to be computed annually for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

On a periodic basis, the Company evaluates its ability to realize its deferred tax assets net of its deferred tax liabilities and adjusts such amounts in light of changing facts and circumstances, including but not limited to the level of past and future taxable income, and the current and future expected utilization of tax benefit carryforwards. The Company considers all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is required to reduce the net deferred tax assets to the amount that is more likely than not to be realized in future periods.  The Company considers past performance, expected future taxable income and prudent and feasible tax planning strategies in assessing the amount of the valuation allowance. The Company’s forecast of expected future taxable income is based over such future periods that it believes can be reasonably estimated.  Based on its analysis as of July 31, 2012, the Company continues to provide a full valuation allowance on its U.S. Federal and state deferred tax assets.  The Company will continue to evaluate the realization of its deferred tax assets and liabilities on a periodic basis, and will adjust such amounts in light of changing facts and circumstances.

The Company performed a review for uncertainty in income tax positions in accordance with authoritative guidance.  This review did not result in the recognition of any material unrecognized tax benefits as of July 31, 2012 and 2011. Management continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings.   The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in selling, general and administrative expenses. For the three months ended July 31, 2012 and 2011, the Company recognized no interest or penalties.  The statute of limitations for the Company's U.S. Federal, state and foreign income tax returns prior to fiscal years 2008 are closed.

Net Income (Loss) Per Common Share

Basic and diluted net income (loss) per common share is computed as net income (loss) from continuing operations divided by the weighted average number of common shares outstanding for the period. The table below presents the computation of basic and diluted net income (loss) per common share from continuing operations for the three months ended July 31, 2012 and 2011, respectively:

Basic income (loss) per share computation	Three Months Ended
	July 31,
	2012			2011
Numerator:
Net income (loss) from continuing operations, net of noncontrolling interest	$	(692,732	)	$	154,008
Denominator:
Basic weighted average shares outstanding		6,954,766			6,954,766
Basic net income (loss) per common share from continuing operations	$	(0.10	)	$	0.02

Diluted income (loss) per share computation	Three Months Ended
	July 31,
	2012			2011
Numerator:
Net income (loss) from continuing operations, net of noncontrolling interest	$	(692,732	)	$	154,008
Denominator:
Basic weighted average shares outstanding		6,954,766			6,954,766
Incremental shares from assumed conversion:
Assumed exercise of stock options		-			9,445
Diluted weighted average shares		6,954,766			6,964,211
Diluted net income (loss) per common share from continuing operations	$	(0.10	)	$	0.02

At July 31, 2012 and 2011, the Company had 227,436 and 272,938 outstanding stock options, respectively. For the three months ended July 31, 2012 and 2011, 227,436 and 199,538 stock options were not included in the computation of diluted net income (loss) in each period, respectively. The potentially dilutive securities were excluded because the Company had a loss from continuing operations for the three months ended July 31, 2012.  For the three months ended July 31, 2011, although the Company had income from continuing operations, the remaining potentially dilutive securities were excluded because the option exercise prices exceeded the average market price of the common stock, and therefore, the effects would be antidilutive.

 Noncontrolling Interest

Noncontrolling interest for the three months ended July 31, 2012 and 2011 consists of the following:

	Three Months Ended
	July 31,
	2012			2011
Balance, beginning of period	$	1,117,322		$	1,038,428
Net (loss) income attributable to noncontrolling interest		(547	)		15,456
Other comprehensive (loss) income attributable to noncontrolling interest		(14,335	)		5,373
Balance, end of period	$	1,102,440		$	1,059,257

Use of Estimates

In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenue and expenses during the reporting period. The most significant estimates relate to the calculation of percentage-of-completion on uncompleted contracts, allowance for doubtful accounts, valuation of inventory, realization of deferred tax assets, amortization method and lives of customer lists, acquisition-related contingent consideration and estimates of the fair value of reporting units and discounted cash flows used in determining whether goodwill has been impaired. Actual results could differ from those estimates.

Recently Issued Accounting Pronouncements

In December 2011, the FASB issued ASU No. 2011-11 (ASU 2011-11), Disclosures about Offsetting Assets and Liabilities where entities are required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. This scope would include derivatives, sale and repurchase agreements, and reverse sale and repurchase agreements, and securities borrowing and securities lending arrangements. These disclosures assist users of financial statements in evaluating the effect or potential effect of netting arrangements on a company’s financial position. The Company is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013 (May 1, 2013 for the Company). The Company does not expect the provisions of ASU 2011-11 to have a material impact on its consolidated financial statements.

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COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS (Table)

3 Months Ended

Jul. 31, 2012

Costs and Estimated Earnings on Uncompleted Contracts

Schedule of Costs and Estimated Earnings on Uncompleted Contracts

Costs and estimated earnings on uncompleted contracts consist of the following at July 31, 2012 and April 30, 2012:

	July 31, 2012			April 30, 2012
Costs incurred on uncompleted contracts	$	78,067,151		$	76,682,610
Provision for loss on uncompleted contracts		(247,769	)		(1,886,896	)
Estimated contract (loss) profit		(528,384	)		2,242,232
		77,290,998			77,037,946
Less: billings to date		77,429,115			79,291,760
Total	$	(138,117	)	$	(2,253,814	)
Costs and estimated earnings in excess of billings on uncompleted contracts	$	2,310,399		$	1,340,379
Billings in excess of costs and estimated earnings on uncompleted contracts		(2,448,516	)		(3,594,193	)
Total	$	(138,117	)	$	(2,253,814	)

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Jul. 31, 2012

Commitments And Contingencies

COMMITMENTS AND CONTINGENCIES

NOTE 10 - COMMITMENTS AND CONTINGENCIES

Other payable

On July 12, 2012, the Company executed the Zurich Agreement with Zurich. Under the terms of the Zurich Agreement, as of July 31, 2012, Zurich advanced the Company $793,927 for the payment of labor and labor-related benefits to assist in completing the project contract with the Camden County Improvement Authority for work at the Cooper Medical Center in New Jersey (the Owner or Cooper Project).  The Cooper Project is a $15.1 million project being completed by the Company’s Trenton Operations. Zurich and its affiliate Fidelity and Deposit Company of Maryland (F&D), as surety, have issued certain performance and payment bonds on behalf of the Owner in regard to the Company’s work on this project. The Company was to repay Zurich the financial advances pursuant to the following repayment schedule:  (1) $397,000 on or about August 3, 2012; and (2) the balance of $396,927 on or about September 7, 2012.  As a condition precedent to the financial advance, the Company executed two letters which are held by Zurich: (1) a letter to the Owner voluntarily terminating its contract for reason of the Company’s default and assigning the contract to Zurich, and (2) a letter of direction to the Owner.  The letters may be forwarded to the Owner in an Event of Default.  An Event of Default under the Zurich Agreement includes: (a) the Company’s failure to make repayments to Zurich in accordance with the repayment schedule; (b) Zurich, at the Company’s request, advances more than $888,000; (c) Zurich pays any of the Company’s  vendors, subcontractors, suppliers or material men pursuant to Zurich’s obligations under its payment bond or any other reason; or (d) the Company uses any of the funds advanced by Zurich for any reason other than the payment of labor and labor benefits incurred in regard to the Cooper Project.  The Company is in default under the Zurich Agreement as it has not repaid Zurich the $793,927.  As a result, a letter of direction was sent to the Owner, requesting that all current and future amounts to be paid on the contract be assigned and paid to Zurich directly.

Performance and payment bonds

The Company is contingently liable to Zurich and its affiliate F&D under a general indemnity agreement. Zurich and F&D, as surety, have issued certain performance and payment bonds on behalf of owners or customers regarding the Company’s work on various projects.  The Company agrees to indemnify the surety for any payments made on contracts of suretyship, guaranty or indemnity. In this regard, Zurich and F&D have received notice of  claims to-date from certain vendors of approximately $4.3 million against payment bonds on the Cooper Project and $723,000 from certain vendors on other projects. The surety is currently investigating these claims, and to date has not disbursed any funds under such payment bonds.  The Company has recorded the appropriate accounts payable related to these projects. The Company believes that all contingent liabilities will be satisfied by its performance and payment on these contracts. 

There is $2,852,346 in current and future billings, including the base contract and approved change orders with the Owner that will be paid directly to Zurich to repay the $793,927 owed under the Zurich Agreement and to partially repay payment bond claims disbursed by Zurich.

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SHAREHOLDERS' EQUITY

3 Months Ended

Jul. 31, 2012

Shareholders' Equity

SHAREHOLDERS' EQUITY

NOTE 6 - SHAREHOLDERS’ EQUITY

Stock-Based Compensation Plans

In September 2006, the Company adopted the 2007 Incentive Stock Plan, under which officers, directors, key employees or consultants may be granted options.  Under the 2007 Incentive Stock Plan, 400,000 shares of common stock were reserved for issuance upon the exercise of stock options, stock awards or restricted stock.  These shares were registered under Form S-8. Under the terms of the 2007 Incentive Stock Plan, stock options are granted at exercise prices equal to the fair market value of the common stock at the date of grant, and become exercisable and expire in accordance with the terms of the stock option agreement between the optionee and the Company at the date of grant.  These options generally vest based on between one to three years of continuous service and have five-year contractual terms.  At July 31, 2012, options to purchase 176,500 shares were outstanding at exercise prices ranging from $2.37 to $6.33. At July 31, 2012, there were 211,000 options available for grant under the 2007 Incentive Stock Plan.

In September 2005, the Company adopted the 2006 Incentive Stock Plan, under which officers, directors, key employees or consultants may be granted options.  Under the 2006 Incentive Stock Plan, 400,000 shares of common stock were reserved for issuance upon the exercise of stock options, stock awards or restricted stock.  These shares were registered under Form S-8. Under the terms of the 2006 Incentive Stock Plan, stock options are granted at exercise prices equal to the fair market value of the common stock at the date of grant, and become exercisable and expire in accordance with the terms of the stock option agreement between the optionee and the Company at the date of grant.  These options generally vest based on between one to three years of continuous service and have five-year contractual terms. At July 31, 2012, options to purchase 1000 shares were outstanding at exercise price of $6.33.  At July 31, 2012, there were 327,424 options available for grant under the 2006 Incentive Stock Plan.

In March 2003, the Company established a stock option plan pursuant to which options to acquire a maximum of 416,667 shares of the Company's common stock were reserved for grant (the "2002 Plan"). These shares were registered under Form S-8. Under the terms of the 2002 Plan, the options are exercisable at prices equal to the fair market value of the stock at the date of the grant and become exercisable in accordance with terms established at the time of the grant. These options generally vest based on between one to three years of continuous service and have five-year contractual terms.   At July 31, 2012, options to purchase 49,936 shares were outstanding at exercise prices ranging from $0.84 to $10.25.  At July 31, 2012, there were 224,214 shares available for grant under the 2002 Plan.

The Company estimates the fair value of stock options granted using the Black-Scholes-Merton option-pricing model. Compensation cost is then recognized on a straight-line basis over the vesting or service period and is net of estimated forfeitures.  There were 10,000 stock options granted during the three months ended July 31, 2012. There were no stock options granted during the three months ended July 31, 2011.

The Company recorded stock-based compensation of $7,526 and $20,288 for the three months ended July 31, 2012 and 2011, respectively. At July 31, 2012, the total compensation cost related to unvested stock options granted to employees under the Company’s stock option plans but not yet recognized was approximately $7,000 and is expected to be recognized over a weighted-average period of 7 months.

The Company has elected to adopt the shortcut method for determining the initial pool of excess tax benefits available to absorb tax deficiencies related to stock-based compensation. The shortcut method includes simplified procedures for establishing the beginning balance of the pool of excess tax benefits (the APIC Tax Pool) and for determining the subsequent effect on the APIC Tax Pool and the Company’s consolidated statements of cash flows of the tax effects of share-based compensation awards. Excess tax benefits related to share-based compensation are reflected as financing cash inflows.

Section 16(b) Settlement

On August 7, 2006, Maureen Huppe, a stockholder of the Company, filed suit in the United States District Court Southern District of New York, against defendants Special Situations Fund III QP, L.P. and Special Situations Private Equity Fund, L.P. (collectively SSF), former stockholders of the Company, alleging violations of Section 16(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78p (b) (Section 16(b)). SSF made sales of 143,120 shares of the Company’s common stock from December 15, 2005 to January 30, 2006, at prices ranging from $9.18 to $12.62 per share.  On April 12, 2006, SSF purchased 666,468 shares of the Company’s common stock at $7.00 per share.

The complaint sought disgorgement from SSF for any "short swing profits" obtained by them in violation of Section 16(b), as a result of the foregoing sales and purchases of the Company’s common stock within periods of less than six months while SSF was a beneficial owner of more than 10% of the Company’s common stock.  The complaint sought disgorgement to the Company of all profits earned by SSF on the transactions, attorneys’ fees and other expenses. While the suit named the Company as a nominal defendant, it contained no claims against nor sought relief from the Company.

On June 13, 2012, the parties executed a court approved settlement which resolved this Section 16(b) action. Pursuant to this settlement, SSF agreed to pay the Company $529,280 in disgorgement of short-swing profits, less the plaintiffs agreed to fees and expenses of $272,539 in connection with the settlement, resulting in the remainder, or $254,361, paid to the Company.  The Company recorded the net proceeds as additional paid-in capital.

Stockholder Rights Plan

On February 24, 2010, the Company adopted a stockholder rights plan. The stockholder rights plan is embodied in the Rights Agreement dated as of February 24, 2010 (the Rights Agreement) between the Company and Interwest Transfer Co., Inc., the Rights Agent.  In connection with the Rights Agreement, the Company declared a dividend of one preferred share purchase right (a Right) for each outstanding share of the Company’s common stock to stockholders of record at the close of business on March 8, 2010.  Each Right entitles the registered holder, subject to the terms of the Rights Agreement, to purchase from the Company one one-thousandth (1/1000th) of a share of Series D Junior Participating Preferred Stock, $0.0001 par value (the Preferred Stock) at a purchase price of $15.00, subject to adjustment.  The Rights will expire at the close of business on February 24, 2020, unless earlier redeemed or exchanged by the Company.  Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends.

The Rights are not immediately exercisable.  The Rights will initially trade only with the shares of the Company’s common stock to which they are attached, and generally become exercisable only if a person or group becomes an Acquiring Person (as defined in the Rights Agreement) by accumulating beneficial ownership (as defined in the Rights Agreement) of 15% or more of the Company’s outstanding common stock.  If a person becomes an Acquiring   Person, the holders of each Right (other than an Acquiring Person) are entitled to purchase shares of the Company’s preferred stock or, in some circumstances, shares of the Acquiring Person’s common   stock, having a value equal to twice   the exercise price of the Right, which is initially $15.00 per Right. The Rights Agreement provides that a person or group currently owning 15% or more of the Company’s outstanding common stock will not be deemed to be an Acquiring Person if the person or group does not subsequently accumulate an additional 1% of the Company’s outstanding common stock through open market purchases, expansion of the group or other means.

At any time prior to a person becoming an Acquiring Person, the Board of Directors of the Company may redeem the Rights in whole, but not in part, at a price of $.0001 per Right.  The Rights Agreement requires a committee of independent directors to review and evaluate every five years whether the Rights Agreement remains in the best interests of the Company’s stockholders.

Shelf Registration Statement

On April 15, 2010, the Company filed a registration statement on Form S-3 using a “shelf” registration process.  Under this shelf registration process, the Company may offer up to 2,314,088 shares of its common stock, from time to time, in amounts, at prices, and terms that will be determined at the time of the offering.  Each share of the Company’s common stock automatically includes one right to purchase one one-thousandth of a share of Series D Junior Participating Preferred Stock, par value $0.0001 per share, which becomes exercisable pursuant to the terms and conditions set forth in the Rights Plan Agreement as described above. The net proceeds from securities sold by the Company will be added to our general corporate funds and may be used for general corporate purposes.  As of July 31, 2012, no shares of the Company’s common stock have been issued under this shelf registration statement.

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DEBT

3 Months Ended

Jul. 31, 2012

Debt

DEBT

NOTE 4 - DEBT

Lines of Credit

On January 27, 2012, the Company and its Subsidiaries entered into the Credit Agreement with Sovereign, which was amended May 3, 2012, and again on August 31, 2012. The Credit Agreement, as amended, provides for a revolving line of credit in an amount not to exceed $2,000,000 and letters of credit in an amount not to exceed $200,000. Pursuant to the Credit Agreement, the Company granted a security interest to Sovereign in all of its assets. In addition, pursuant to a collateral pledge agreement, the Company pledged 100% of its ownership in the Subsidiaries and 65% of its ownership in WPCS Australia Pty Ltd.  Borrowings under the Credit Agreement may be used for general corporate purposes, for permitted acquisitions, for working capital and for related fees and expenses.  The Company used the initial funds provided by the loan to repay the existing loan to Bank of America, N.A. (BOA), which loan agreement was terminated in connection with the Credit Agreement and to pay $409,177 for fees and expenses in connection with the Credit Agreement. The Company paid a loan commitment fee of $60,000 and will pay a monthly unused commitment fee during the term of the Credit Agreement of 0.375%. In addition, the Company shall pay Sovereign a collateral monitoring fee of $1,000 per month during the term of the Credit Agreement and 2.25% per annum on the face amount of each letter of credit issued by Sovereign.  The interest rate applicable to revolving loans under the Credit Agreement is the Prime Rate (3.25%) plus 2.00%, or 5.25%.  The Credit Agreement matures on January 27, 2015.

On May 3, 2012, the Company entered into the Amendment to the Credit Agreement with Sovereign.  The Amendment reduced the maximum revolving line of credit in amount not to exceed $6,500,000.  As of July 31, 2012, there were no borrowings outstanding under the Credit Agreement.  As a result of the asset sales described in Note 9, the total amount available to borrow under the Credit Agreement based on the revised eligible accounts receivable was $1,759,119.

On August 31, 2012, the Company entered into the Second Amendment with Sovereign. Pursuant to the terms of the Second Amendment, the Company is permitted to borrow  under the revolving credit line, under a Borrowing Base equal to the lesser of (i) $2,000,000 less the letter of credit amount, or (ii) the sum of (a) 80% of Eligible Accounts Receivable, minus (c) the letter of credit amount minus (d) such reserves, in such amounts and with respect to such matters, as Sovereign may deem reasonably proper and necessary from time to time at its own discretion, which is currently $500,000.  As of September 12, 2012, the total amount available to borrow under the Credit Agreement was $1,759,119, and the total advance amount outstanding was $204,619, resulting in net availability for future borrowings of $1,554,500.  The reduction in the revolving line of credit did not require the Company to pay down any additional borrowings as the total amount of outstanding borrowings was not in excess of the total amount available to borrow.

The Company may prepay the loan at any time and may terminate the Credit Agreement upon 90 days prior written notice.  In the event that we terminate the Credit Agreement, the Company will pay Sovereign an early termination fee of 3% of the maximum credit amount if such termination occurs prior to the first anniversary or 1% of the maximum credit amount if such termination occurs after the first anniversary but prior to the expiration of the Credit Agreement.

Our obligations under the Credit Agreement may be accelerated upon the occurrence of an event of default under the Credit Agreement, which includes customary events of default including, without limitation, payment defaults, defaults in the performance of affirmative and negative covenants, subjective acceleration clauses, the inaccuracy of representations or warranties, cross-defaults, bankruptcy and insolvency related defaults, defaults relating to judgments, an ERISA reportable event occurs, a change of control and a change in our financial condition that could have a material adverse effect on the Company.

The Credit Agreement contains certain customary representations and warranties, affirmative and negative covenants, and lock box arrangements. Principal covenants include (a) Fixed Charge Coverage Ratio of not less than 1.2 to 1.0, measured as of April 30, 2012 and as of each fiscal quarter end thereafter, in each case on a trailing two (2) quarter basis; and (b) Leverage Ratio of not more than 1.75 to 1.0, measured as of each fiscal quarter end. Due to the operating losses for the quarters ended April 30, 2012 and July 31, 2012, the Company did not meet the Fixed Charge Coverage Ratio of 1.2 to 1.0 for the two quarters ended April 30, 2012 and July 31, 2012, and the Leverage Ratio of 1.75 to 1.0 at April 30, 2012, and the Company is currently in default under the Credit Agreement. In connection with the Second Amendment, Sovereign reserved all of its available rights and/or remedies as a result of the defaults of the financial covenants, including the right to demand repayment of amounts outstanding or withhold or cease making credit advances under the Credit Agreement.

Loans Payable

The Company’s long-term debt also consists of notes issued by the Company or assumed in acquisitions related to working capital funding and the purchase of property and equipment in the ordinary course of business. At July 31, 2012, loans payable and capital lease obligations totaled $105,970 with interest rates ranging from 0% to 12.7%.

Due Joint Venture Partner

As of July 31, 2012, the China Operations had outstanding unsecured loans due the joint venture partner, Taian Gas Group (TGG), totaling $3,412,434, of which $2,357,250 matures on September 30, 2012, and bears interest at 5.81%.  The Company expects to renew the outstanding loans on or prior to maturity consistent with historical practice. The remaining balance of $1,055,184 is due on demand and represents interest accrued and working capital loans from TGG to the China Operations in the normal course of business.

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RELATED PARTY TRANSACTIONS

3 Months Ended

Jul. 31, 2012

Related Party Transactions

RELATED PARTY TRANSACTIONS

NOTE 5 - RELATED PARTY TRANSACTIONS

In connection with the acquisition of the Trenton Operations, the Company leased its Trenton, New Jersey location from Voacolo Properties LLC, of which the former shareholders of the Trenton Operations are the members.  For the three months ended July 31, 2012 and 2011, the rent paid for this lease was $12,600 and $17,400, respectively.  This lease was terminated as of June 30, 2012.

In connection with the acquisition of Pride, the Company leases its Woombye, Queensland, Australia location from Pride Property Trust, of which the former shareholders of the Pride Group (QLD) Pty Ltd. are the members. For each of the three month periods ended July 31, 2012 and 2011, the rents paid for this lease were $15,543.

The China Operations revenue earned from TGG and subsidiaries was $0 and $689,235 for the three months ended July 31, 2012 and 2011, respectively. The China Operations accounts receivable due from TGG and subsidiaries was $617,661 and $425,975 as of July 31, 2012 and 2011, respectively.

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SEGMENT REPORTING

3 Months Ended

Jul. 31, 2012

Segment Reporting

SEGMENT REPORTING

NOTE 7 - SEGMENT REPORTING

The Company's reportable segments are determined and reviewed by management based upon the nature of the services, the external customers and customer industries and the sales and distribution methods used to market the products. The Company organizes its reportable segments to correspond with its primary service lines: wireless communications, specialty construction and electrical power.  Management evaluates performance based upon income (loss) before income taxes. Corporate includes corporate salaries and external professional fees, such as accounting, legal and investor relations costs which are not allocated to the other segments.  Corporate assets primarily include cash and cash equivalents and prepaid expenses.

As part of the divestiture transactions more fully described in Note 9, the Company reclassified the reporting units within its reportable segments.  As a result, wireless communications includes the Suisun City and Australia Operations, specialty construction includes the China Operations, and electrical power includes the Trenton, Seattle and Portland Operations, for each of the periods presented.  The segment information presented below with regard to the operating results no longer includes amounts related to the St. Louis, Sarasota, Lakewood and Hartford Operations, which were sold and subsequently reported as discontinued operations.  The Sarasota, Lakewood and Hartford Operations were previously reported in the wireless communications segment and the St. Louis Operation was reported in the specialty construction segment.  Segment results for the three months ended July 31, 2012 and 2011 are as follows:

	As of and for the Three Months Ended July 31, 2012													As of and for the Three Months Ended July 31, 2011
	Corporate			Wireless Communications			Specialty Construction		Electrical Power		Total			Corporate			Wireless Communications		Specialty Construction		Electrical Power		Total
Revenue	$	-		$	4,614,811		$	1,030,800	$	7,798,806	$	13,444,417		$	-		$	7,098,539	$	1,300,129	$	10,217,423	$	18,616,091
Depreciation and amortization	$	10,993		$	94,803		$	174,691	$	81,227	$	361,714		$	16,373		$	128,945	$	181,999	$	111,856	$	439,173
Income (loss) from continuing operations before income taxes	$	(866,461	)	$	(40,308	)	$	18,831	$	330,282	$	(557,656	)	$	(910,609	)	$	861,110	$	72,926	$	557,925	$	581,352
Goodwill	$	-		$	1,963,321		$	-	$	-	$	1,963,321		$	-		$	2,038,978	$	-	$	-	$	2,038,978
Total assets	$	786,681		$	9,088,501		$	7,497,749	$	8,580,457	$	25,953,388		$	8,922,917		$	13,041,863	$	10,761,219	$	13,606,674	$	46,332,673
Additions of property and equipment	$	-		$	39,820		$	136,343	$	58,850	$	235,013		$	2,662		$	23,737	$	65,567	$	15,306	$	107,272

As of and for the three months ended July 31, 2012 and 2011, the specialty construction segment includes approximately $1,031,000 and $1,300,000 in revenue and $847,000 and $854,000 of net assets held in China related to the Company’s 60% interest in the China Operations, respectively. As of and for the three months ended July 31, 2012 and 2011, the wireless communications segment includes approximately $2,156,000 and $3,283,000 in revenue and $2,816,000 and $2,697,000 of net assets held in Australia related to the Company’s Australia Operations, respectively.

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COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS (Details Textual) (USD $)	3 Months Ended
	Jul. 31, 2012	Jul. 31, 2011
Increase In Gross Profit	$ 459,000	$ 406,000
Increase In Gross Profit Per Share	$ 0.07	$ 0.06
Trenton Operations [Member]
Increase In Gross Profit	$ 736,000

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Jul. 31, 2012

Summary of Significant Accounting Policies

Principles of Consolidation

Principles of Consolidation

All significant intercompany transactions and balances have been eliminated in these condensed consolidated financial statements.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents include all cash and highly-liquid investments with a maturity at time of purchase of three months or less.

Accounts Receivable

Accounts Receivable

Accounts receivable are due within contractual payment terms and are stated at amounts due from customers net of an allowance for doubtful accounts. Credit is extended based on evaluation of a customer's financial condition. Accounts outstanding longer than the contractual payment terms are considered past due. The Company determines an allowance by considering a number of factors, including the length of time trade accounts receivable are past due, our previous loss history, the customer's current ability to pay its obligation to the Company, and the condition of the general economy and the industry as a whole. The Company writes off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company’s material financial instruments at July 31, 2012 and for which disclosure of estimated fair value is required by certain accounting standards consisted of cash and cash equivalents, accounts receivable, account payable, line of credit and loans payable. The fair values of cash and cash equivalents, accounts receivable, and account payable are equal to their carrying value because of their liquidity and short-term maturity. Management believes that the fair values of the line of credit and loans payable do not differ materially from their aggregate carrying values in that substantially all the obligations bear variable interest rates that are based on market rates or interest rates that are periodically adjustable to rates that are based on market rates.

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

Goodwill represents the amount by which the purchase prices of the Company's wholly-owned subsidiaries were in excess of the fair value of identifiable net assets as of the date of acquisition.  Other intangible assets have finite useful lives and are comprised of customer lists and backlog.

Goodwill is tested at least annually for impairment, and otherwise on an interim basis should events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. Determination of impairment requires the Company to compare the fair value of the business acquired (reporting unit) to its carrying value, including goodwill, of such business (reporting unit). If the fair value exceeds the carrying value, no impairment loss is recognized. However, if the carrying value of the reporting unit exceeds its fair value, the goodwill of the unit may be impaired. The amount, if any, of the impairment is then measured in the second step, based on the excess, if any, of the reporting unit’s carrying value of goodwill over its implied value.

The Company determines the fair value of the reporting units for purposes of this test primarily by using a discounted cash flow valuation technique. Significant estimates used in the valuation include estimates of future cash flows, both future short-term and long-term growth rates, and estimated cost of capital for purposes of arriving at a discount factor. The Company performs its annual impairment test at April 30 absent any interim impairment indicators. Significant adverse changes in general economic conditions could impact the Company's valuation of its reporting units. For the three months ended July 31, 2012, there were no interim impairment indicators.

The Company reviews its other intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  In performing a review for impairment, the Company compares the carrying value of the assets with their estimated future undiscounted cash flows from the use of the asset and eventual disposition. If the estimated undiscounted future cash flows are less than carrying value, an impairment loss is charged to operations based on the difference between the carrying amount and the fair value of the asset .

Changes in goodwill consist of the following during the three months ended July 31, 2012:

	Total
Beginning balance, May 1, 2012	$	1,930,826
Foreign currency translation adjustments		32,495
Ending balance, July 31, 2012	$	1,963,321

Other intangible assets consist of the following at July 31, 2012 and April 30, 2012:

	Estimated useful life		July 31,			April 30,
	(years)		2012			2012
Customer list		3-9	$	1,982,303		$	2,961,799
Less accumulated amortization				(1,628,575	)		(2,579,895	)
				353,728			381,904
Contract backlog		1-3		1,038,932			1,034,787
Less accumulated amortization				(1,038,450	)		(1,033,839	)
				482			948
Totals			$	354,210		$	382,852

Amortization expense of other intangible assets for the three months ended July 31, 2012 and 2011 was $35,099 and $40,890, respectively. There are no expected residual values related to these intangible assets.

Revenue Recognition

Revenue Recognition

The Company generates its revenue by providing design-build engineering services for communications infrastructure. The Company’s design-build services report revenue pursuant to customer contracts that span varying periods of time. The Company reports revenue from contracts when persuasive evidence of an arrangement exists, fees are fixed or determinable, and collection is reasonably assured.

The Company records revenue and profit from long-term contracts on a percentage-of-completion basis, measured by the percentage of contract costs incurred to date to the estimated total costs for each contract.  Contracts in process are valued at cost plus accrued profits less earned revenues and progress payments on uncompleted contracts. Contract costs include direct materials, direct labor, third party subcontractor services and those indirect costs related to contract performance. Contracts are generally considered substantially complete when engineering is completed and/or site construction is completed.

The Company has numerous contracts that are in various stages of completion. Such contracts require estimates to determine the appropriate cost and revenue recognition. Cost estimates are reviewed monthly on a contract-by-contract basis, and are revised periodically throughout the life of the contract such that adjustments to profit resulting from revisions are made cumulative to the date of the revision. Significant management judgments and estimates, including the estimated cost to complete projects, which determines the project’s percent complete, must be made and used in connection with the revenue recognized in the accounting period. Current estimates may be revised as additional information becomes available. If estimates of costs to complete long-term contracts indicate a loss, provision is made currently for the total loss anticipated. For the three months ended July 31, 2012 and 2011, the Company has provided aggregate loss provisions of approximately $247,769 and $317,469 related to anticipated losses on long-term contracts.

The length of the Company’s contracts varies. Assets and liabilities related to long-term contracts are included in current assets and current liabilities in the accompanying balance sheets as they will be liquidated in the normal course of contract completion, although this may require more than one year.

The Company records revenue and profit from short-term contracts for the China Operations under the completed contract method, whereas income is recognized only when a contract is completed or substantially completed. Accordingly, during the period of performance, billings and costs are accumulated on the balance sheet, but no revenue or income is recorded before completion or substantial completion of the work.  The Company’s decision is based on the short-term nature of the work performed.

The Company also recognizes certain revenue from short-term contracts when the services have been provided to the customer.  For maintenance contracts, revenue is recognized ratably over the service period.

Income Taxes

Income Taxes

The Company accounts for income taxes pursuant to the asset and liability method which requires deferred income tax assets and liabilities to be computed annually for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

On a periodic basis, the Company evaluates its ability to realize its deferred tax assets net of its deferred tax liabilities and adjusts such amounts in light of changing facts and circumstances, including but not limited to the level of past and future taxable income, and the current and future expected utilization of tax benefit carryforwards. The Company considers all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is required to reduce the net deferred tax assets to the amount that is more likely than not to be realized in future periods.  The Company considers past performance, expected future taxable income and prudent and feasible tax planning strategies in assessing the amount of the valuation allowance. The Company’s forecast of expected future taxable income is based over such future periods that it believes can be reasonably estimated.  Based on its analysis as of July 31, 2012, the Company continues to provide a full valuation allowance on its U.S. Federal and state deferred tax assets.  The Company will continue to evaluate the realization of its deferred tax assets and liabilities on a periodic basis, and will adjust such amounts in light of changing facts and circumstances.

The Company performed a review for uncertainty in income tax positions in accordance with authoritative guidance.  This review did not result in the recognition of any material unrecognized tax benefits as of July 31, 2012 and 2011. Management continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings.   The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in selling, general and administrative expenses. For the three months ended July 31, 2012 and 2011, the Company recognized no interest or penalties.  The statute of limitations for the Company's U.S. Federal, state and foreign income tax returns prior to fiscal years 2008 are closed.

Net Income (Loss) Per Common Share

Net Income (Loss) Per Common Share

Basic and diluted net income (loss) per common share is computed as net income (loss) from continuing operations divided by the weighted average number of common shares outstanding for the period. The table below presents the computation of basic and diluted net income (loss) per common share from continuing operations for the three months ended July 31, 2012 and 2011, respectively:

Basic income (loss) per share computation	Three Months Ended
	July 31,
	2012			2011
Numerator:
Net income (loss) from continuing operations, net of noncontrolling interest	$	(692,732	)	$	154,008
Denominator:
Basic weighted average shares outstanding		6,954,766			6,954,766
Basic net income (loss) per common share from continuing operations	$	(0.10	)	$	0.02

Diluted income (loss) per share computation	Three Months Ended
	July 31,
	2012			2011
Numerator:
Net income (loss) from continuing operations, net of noncontrolling interest	$	(692,732	)	$	154,008
Denominator:
Basic weighted average shares outstanding		6,954,766			6,954,766
Incremental shares from assumed conversion:
Assumed exercise of stock options		-			9,445
Diluted weighted average shares		6,954,766			6,964,211
Diluted net income (loss) per common share from continuing operations	$	(0.10	)	$	0.02

At July 31, 2012 and 2011, the Company had 227,436 and 272,938 outstanding stock options, respectively. For the three months ended July 31, 2012 and 2011, 227,436 and 199,538 stock options were not included in the computation of diluted net income (loss) in each period, respectively. The potentially dilutive securities were excluded because the Company had a loss from continuing operations for the three months ended July 31, 2012.  For the three months ended July 31, 2011, although the Company had income from continuing operations, the remaining potentially dilutive securities were excluded because the option exercise prices exceeded the average market price of the common stock, and therefore, the effects would be antidilutive.

Noncontrolling Interest

Noncontrolling Interest

Noncontrolling interest for the three months ended July 31, 2012 and 2011 consists of the following:

	Three Months Ended
	July 31,
	2012			2011
Balance, beginning of period	$	1,117,322		$	1,038,428
Net (loss) income attributable to noncontrolling interest		(547	)		15,456
Other comprehensive (loss) income attributable to noncontrolling interest		(14,335	)		5,373
Balance, end of period	$	1,102,440		$	1,059,257

Use of Estimates

Use of Estimates

In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenue and expenses during the reporting period. The most significant estimates relate to the calculation of percentage-of-completion on uncompleted contracts, allowance for doubtful accounts, valuation of inventory, realization of deferred tax assets, amortization method and lives of customer lists, acquisition-related contingent consideration and estimates of the fair value of reporting units and discounted cash flows used in determining whether goodwill has been impaired. Actual results could differ from those estimates.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In December 2011, the FASB issued ASU No. 2011-11 (ASU 2011-11), Disclosures about Offsetting Assets and Liabilities where entities are required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. This scope would include derivatives, sale and repurchase agreements, and reverse sale and repurchase agreements, and securities borrowing and securities lending arrangements. These disclosures assist users of financial statements in evaluating the effect or potential effect of netting arrangements on a company’s financial position. The Company is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013 (May 1, 2013 for the Company). The Company does not expect the provisions of ASU 2011-11 to have a material impact on its consolidated financial statements.

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DISCONTINUED OPERATIONS (Tables)

3 Months Ended

Jul. 31, 2012

Discontinued Operations

Schedule of Disposal Groups, Including Discontinued Operations, Income Statement

The Company has reported the financial activity of these four operations as discontinued operations for all periods presented.  A summary of the operating results for the discontinued operations is as follows:

	Three Months Ended
	July 31,
	2012			2011
REVENUE	$	4,901,501		$	6,803,412
COSTS AND EXPENSES:
Cost of revenue		4,088,400			5,365,943
Selling, general and administrative expenses		1,291,164			1,898,584
Depreciation and amortization		101,750			165,659
		5,481,314			7,430,186
OPERATING LOSS FROM DISCONTINUED OPERATIONS		(579,813	)		(626,774	)
Interest expense		5,315			139
Loss from discontinued operations before income tax provision (benefit)		(585,128	)		(626,913	)
Income tax provision (benefit)		54,164			(438,228	)
Loss from discontinued operations, net of tax		(639,292	)		(188,685	)
Gain from disposal		2,324,631			-
TOTAL INCOME (LOSS) FROM DISCONTINUED OPERATIONS	$	1,685,339		$	(188,685	)

Schedule of Disposal Groups, Including Discontinued Operations, Balance Sheet

The major classes of assets and liabilities included in the condensed consolidated balance sheets at April 30, 2012 for the Hartford and Lakewood Operations as discontinued operations were as follows:

	April 30, 2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	2,432
Accounts receivable, net of allowance of $134,929 at April 30, 2012		5,837,341
Costs and estimated earnings in excess of billings on uncompleted contracts		183,760
Inventory		1,416,773
Prepaid expenses and other current assets		82,971
Prepaid income taxes		47,920
Total current assets		7,571,197
PROPERTY AND EQUIPMENT, net		1,013,377
OTHER ASSETS		51,478
Total assets		8,636,052
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current portion of loans payable		99,002
Income taxes payable		2,000
Accounts payable and accrued expenses		4,754,099
Billings in excess of costs and estimated earnings on uncompleted contracts		33,103
Deferred revenue		498,934
Total current liabilities		5,387,138
Loans payable, net of current portion		172,222
Total liabilities		5,559,360
Total net assets	$	3,076,692

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FAIR VALUE MEASUREMENTS (Details Textual) (USD $)	3 Months Ended
	Jul. 31, 2012	Jul. 31, 2011
Change in the fair value of acquisition-related contingent consideration	$ 0	$ 43,068
Fair Value, Inputs, Level 3 [Member]
Fair Value Inputs, Discount Rate		18.02%
Fair Value Inputs, Long-term Revenue Growth Rate		10.00%
Fair Value, Inputs, Level 3 [Member] | Minimum [Member]
Fair Value Inputs, Long-term Pre-tax Operating Margin, Percent		7.50%
Fair Value Inputs Earnings Before Interest Taxes Depreciation and Amortization Multiples		0.00%
Fair Value, Inputs, Level 3 [Member] | Maximum [Member]
Fair Value Inputs, Long-term Pre-tax Operating Margin, Percent		13.32%
Fair Value Inputs Earnings Before Interest Taxes Depreciation and Amortization Multiples		100.00%

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) (USD $)	3 Months Ended
	Jul. 31, 2012	Jul. 31, 2011
Income tax provision (benefit) from operations of discontinued operations	$ 54,164	$ (438,228)

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LIQUIDITY AND BASIS OF PRESENTATION

3 Months Ended

Jul. 31, 2012

Liquidity And Basis Of Presentation

LIQUIDITY AND BASIS OF PRESENTATION

NOTE 1 - LIQUIDITY AND BASIS OF PRESENTATION

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of WPCS International Incorporated (WPCS) and its wholly and majority-owned subsidiaries, as follows, collectively referred to as “we”, “us” or the "Company".  United States-based subsidiaries include WPCS Incorporated, WPCS International – Suisun City, Inc. (Suisun City Operations), WPCS International – Trenton, Inc. (Trenton Operations), WPCS International – Seattle, Inc . (Seattle Operations), and WPCS International – Portland, Inc. (Portland Operations). International operations include WPCS Asia Limited, 60% of Taian AGS Pipeline Construction Co. Ltd. (China Operations), and WPCS Australia Pty Ltd., WPCS International – Brendale, Pty Ltd., and The Pride Group (QLD) Pty Ltd. (Pride), (collectively, Australia Operations) .

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for quarterly reports on Form 10-Q of Article 10 of Regulation S-X and do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America. Accordingly, the unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the fiscal year ended April 30, 2012 included in the Company’s Annual Report on Form 10-K. The accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of the management, considered necessary for a fair presentation of condensed consolidated financial position, results of operations and cash flows for the interim periods. Operating results for the three month period ended July 31, 2012 are not necessarily indicative of the results that may be expected for the fiscal year ending April 30, 2013. The amounts for the April 30, 2012 balance sheet have been extracted from the audited consolidated financial statements included in Form 10-K for the year ended April 30, 2012.

The Company provides design-build engineering services that focus on the implementation requirements of communications infrastructure. The Company provides its engineering capabilities including wireless communication, specialty construction and electrical power to the public services, healthcare, energy and corporate enterprise markets worldwide.

On September 1, 2011, the Company sold its wholly-owned subsidiaries, WPCS International - St. Louis, Inc. (St. Louis Operations) and its WPCS International -Sarasota, Inc. (Sarasota Operations).  On July 25, 2012, the Company sold substantially all of the assets of its wholly-owned subsidiaries, WPCS International - Hartford, Inc. (Hartford Operations) and WPCS International - Lakewood, Inc. (Lakewood Operations).  As a result, these condensed consolidated financial statements reflect the results of these four operations as discontinued operations for all periods presented, including certain reclassifications to prior year financial statements to present discontinued operations.

Going Concern

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

As further described in Note 4, “Debt”, on January 27, 2012, WPCS and its United States-based subsidiaries Suisun City Operations, Seattle Operations, Portland Operations, Hartford Operations, Lakewood Operations, and Trenton Operations (collectively, the Subsidiaries),  entered into a loan and security agreement (the Credit Agreement) with Sovereign Bank, N.A. (Sovereign).

The Credit Agreement contains certain customary representations and warranties, affirmative and negative covenants, and events of default. Principal covenants include (a) Fixed Charge Coverage Ratio of not less than 1.2 to 1.0, measured as of April 30, 2012 and as of each fiscal quarter end thereafter, in each case on a trailing two (2) quarter basis; and (b) Leverage Ratio of not more than 1.75 to 1.0, measured as of each fiscal quarter end.  Due to the operating losses for the quarters ended April 30, 2012 and July 31, 2012, the Company did not meet the Fixed Charge Coverage Ratio of 1.2 to 1.0 for the two quarters ended April 30, 2012 and July 31, 2012, and the Leverage Ratio of not more than 1.75 to 1.0 at April 30, 2012, and the Company is currently in default under the Credit Agreement.

As a result, the Credit Agreement was amended on May 3, 2012 and on August 31, 2012.  On August 31, 2012, the Company entered into the Second Amendment to Loan and Security Agreement (the Second Amendment) to the Credit Agreement with Sovereign. The Second Amendment reduced the maximum revolving line of credit in amount not to exceed $2,000,000. As of September 12, 2012, the total amount available to borrow under the Credit Agreement was $1,759,119, and the total advance amount outstanding was $204,619, resulting in net availability for future borrowings of $1,554,500. The reduction in the revolving line of credit did not require the Company to pay down any additional borrowings as the total amount of outstanding borrowings was not in excess of the total amount available to borrow.  In connection with the Second Amendment, Sovereign reserved all of its available rights and/or remedies as a result of the defaults of the financial covenants, including the right to demand repayment of amounts outstanding immediately or the right to withhold or cease making credit advances under the Credit Agreement.  If Sovereign decided to demand repayment of existing amounts outstanding under the Credit Agreement, the Company would not have the ability to satisfy this current repayment obligation to Sovereign. If Sovereign exercised any of its available rights, it would have a serious adverse effect on the Company’s business, operations and future prospects.  As a result, the Company is considering the following alternatives to repay Sovereign, including but not limited to: (1)  seeking alternative debt financing and has commenced discussions with other senior lenders to replace the Credit Agreement; (2) divestiture of  additional assets or operations; or (3) merger with or sale of the Company to a third party.

As more fully described in Note 10, “Commitments and Contingencies,” on July 12, 2012, the Company executed the Surety Financing and Confession of Judgment Agreement (the Zurich Agreement) with Zurich American Insurance Company (Zurich). The Company is not in compliance with the terms of the Zurich Agreement.  As a result of the Company’s noncompliance, the Company instructed the owner of this project to make at all current and future payments directly to Zurich.

The Company’s failure to comply with the terms of the Credit Agreement and the Zurich Agreement, as well as the Company’s losses from operations for the three months ended July 31, 2012 raise substantial doubt about the Company’s ability to continue as a going concern. At July 31, 2012, the Company had cash and cash equivalents of $1,257,920 and working capital of $1,412,252, which consisted of current assets of $20,145,533 and current liabilities of $18,733,281. As of September 12, 2012, the Company had remaining availability under the Credit Agreement of $1,554,500.

Based on current projections, the Company does not expect its available cash, working capital balances, operating expense management and expected future operating income to be sufficient to cover its liquidity needs beyond the end of its second fiscal quarter or early into its third fiscal quarter for the fiscal year ending April 30, 2013.   The Company's continuation as a going concern is ultimately dependent upon its future financial performance and ability to refinance or restructure its credit facilities, which will be affected by general economic, competitive, and other factors, many of which are beyond the Company's control. There can be no assurance that the execution of one or more of the alternatives described above to repay Sovereign will be successful to ensure the Company’s continuation as a going concern .   The report of our independent registered public accounting firm for the year ended April 30, 2012 contained an emphasis paragraph indicating there is substantial doubt concerning our ability to continue as a going concern.

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LIQUIDITY AND BASIS OF PRESENTATION (Details Textual) (USD $)	3 Months Ended
	Jul. 31, 2012	Apr. 30, 2012	Jul. 31, 2011	Apr. 30, 2011
Percentage Of International Operation	60.00%
Debt Instrument, Description	Principal covenants include (a) Fixed Charge Coverage Ratio of not less than 1.2 to 1.0, measured as of April 30, 2012 and as of each fiscal quarter end thereafter, in each case on a trailing two (2) quarter basis; and (b) Leverage Ratio of not more than 1.75 to 1.0, measured as of each fiscal quarter end. Due to the operating losses for the quarters ended April 30, 2012 and July 31, 2012, the Company did not meet the Fixed Charge Coverage Ratio of 1.2 to 1.0 for the two quarters ended April 30, 2012 and July 31, 2012, and the Leverage Ratio of not more than 1.75 to 1.0 at April 30, 2012, and the Company is currently in default under the Credit Agreement.
Cash and cash equivalents	$ 1,257,920	$ 811,283	$ 4,063,322	$ 4,879,106
Line of Credit Facility, Maximum Borrowing Capacity	1,759,119
Working Capital	1,412,252
Total current assets	20,145,533	28,557,252
Total current liabilities	18,733,281	29,686,874
August 31, 2012 [Member]
Line of Credit Facility, Maximum Borrowing Capacity	2,000,000
September 12, 2012 [Member]
Line of Credit Facility, Amount Outstanding	204,619
Line of Credit Facility, Remaining Borrowing Capacity	1,554,500
Line of Credit Facility, Maximum Borrowing Capacity	$ 1,759,119

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SEGMENT REPORTING (Details) (USD $)	3 Months Ended
	Jul. 31, 2012	Jul. 31, 2011	Apr. 30, 2012
Revenue	$ 13,444,417	$ 18,616,091
Depreciation and amortization	361,714	439,173
Income (loss) from continuing operations before income taxes	(557,656)	581,352
Goodwill	1,963,321	2,038,978	1,930,826
Total assets	25,953,388	46,332,673	35,795,399
Additions of property and equipment	235,013	107,272
Corporate [Member]
Revenue	0	0
Depreciation and amortization	10,993	16,373
Income (loss) from continuing operations before income taxes	(866,461)	(910,609)
Goodwill	0	0
Total assets	786,681	8,922,917
Additions of property and equipment	0	2,662
Wireless Communication [Member]
Revenue	4,614,811	7,098,539
Depreciation and amortization	94,803	128,945
Income (loss) from continuing operations before income taxes	(40,308)	861,110
Goodwill	1,963,321	2,038,978
Total assets	9,088,501	13,041,863
Additions of property and equipment	39,820	23,737
Specialty Communication [Member]
Revenue	1,030,800	1,300,129
Depreciation and amortization	174,691	181,999
Income (loss) from continuing operations before income taxes	18,831	72,926
Goodwill	0	0
Total assets	7,497,749	10,761,219
Additions of property and equipment	136,343	65,567
Electrical Power [Member]
Revenue	7,798,806	10,217,423
Depreciation and amortization	81,227	111,856
Income (loss) from continuing operations before income taxes	330,282	557,925
Goodwill	0	0
Total assets	8,580,457	13,606,674
Additions of property and equipment	$ 58,850	$ 15,306

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LEGAL PROCEEDINGS

3 Months Ended

Jul. 31, 2012

Legal Proceedings

LEGAL PROCEEDINGS

NOTE 11 - LEGAL PROCEEDINGS

On or about June 22, 2011, a purported shareholder of the Company filed a derivative and putative class action lawsuit in the Court of Common Pleas of Pennsylvania, Chester County against the Company and its directors, by filing a Summons and Complaint.  The case is Ralph Rapozo v. WPCS International Incorporated, et al., Docket No. 11-06837 (No Judge has been assigned at this time).  In this action, the plaintiff seeks to enjoin the proposed transaction in which Multiband would acquire all of the outstanding shares of the Company.  The plaintiff alleges, among other things, that the consideration to be paid for such acquisition by Multiband is inadequate, and that the individual board members failed to engage in an honest and fair sales process for the Company and failed to disclose material information for the purposes of advancing their own interests over those of the Company and its shareholders.  To that end, the plaintiff asserts a claim for breach of fiduciary duty against the Company’s board of directors.  In the event that the proposed transaction is consummated, the plaintiff seeks money damages.  The plaintiff also asserts a claim against the Company and Multiband Corporation for aiding and abetting breach of fiduciary duty for which he seeks unspecified money damages. 

On or about June 22, 2011, a purported shareholder of the Company filed a derivative and putative class action lawsuit in the Court of Common Pleas of Pennsylvania, Chester County against the Company and its directors, by filing a Summons and Complaint.  The case is Robert Shepler v. WPCS International Incorporated, et al., Docket No. 11-06838 (No Judge has been assigned at this time).  In this action, the plaintiff also seeks to enjoin the proposed transaction in which Multiband would acquire all of the outstanding shares of the Company.  The plaintiff alleges, among other things, that the consideration to be paid for such acquisition by Multiband Corporation is inadequate, and that the individual board members failed to engage in an honest and fair sales process for the Company and failed to disclose material information for the purposes of advancing their own interests over those of the Company and its shareholders.  To that end, the plaintiff asserts a claim for breach of fiduciary duty against the Company’s board of directors. In the event that the proposed transaction is consummated, the plaintiff seeks money damages.  The plaintiff also asserts a claim against the Company and Multiband for aiding and abetting breach of fiduciary duty for which he seeks unspecified money damages. On August 11, 2011, the Shepler case was consolidated into the Rapozo vs. WPCS case.

On or about June 30, 2011, a purported shareholder of the Company filed a derivative and putative class action lawsuit in the Court of Common Pleas of Pennsylvania, Chester County against the Company and its directors, by filing a Summons and Complaint.  The case is Edwin M. McKean v. WPCS International Incorporated, et al., (No Docket number or Judge has been assigned at this time).  In this action, the plaintiff also seeks to enjoin a proposed transaction in which Multiband would acquire all of the outstanding shares of the Company.  The plaintiff’s allegations are substantially similar to the allegations in Rapozo v. WPCS and Shepler v. WPCS discussed above. The plaintiff alleges, among other things, that the consideration to be paid for such acquisition by Multiband is inadequate, and that the individual board members failed to engage in an honest and fair sales process for the Company and failed to disclose material information for the purposes of advancing their own interests over those of the Company and its shareholders.  To that end, the plaintiff asserts a claim for breach of fiduciary duty against the Company’s board of directors.  In the event that the proposed transaction is consummated, the plaintiff seeks money damages.  The plaintiff also asserts a claim against the Company and Multiband for aiding and abetting breach of fiduciary duty for which he seeks unspecified money damages.  On October 18, 2011, the McKean case was consolidated into the Rapozo vs. WPCS case.

WPCS’ time to answer or move with respect to the Complaint in the Rapozo case has not yet expired.  The Company and its directors deny the material allegations of this complaint and intend to vigorously defend this action if necessary, however, as Multiband has announced that it is no longer pursuing the acquisition of WPCS, the Company anticipates that the lawsuit will be dismissed.