NOTE 1 – DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION

Description of the Business

The Company currently specializes in contracting services, with 54 (12 full-time and 42 part-time union) employees in one operation center, offering communications infrastructure services through its wholly-owned domestic subsidiary, WPCS International - Suisun City, Inc. (“Suisun City Operations”).

Communication infrastructure services include low voltage communications contracting services offered to the public services, healthcare, energy and corporate enterprise markets. The Company provides an integrated approach to project coordination that creates cost-effective solutions. Corporations, government entities, healthcare organizations and educational institutions depend on the reliability and accuracy of voice, data and video communications. However, the potential for this new technology cannot be realized without the right infrastructure to support the convergence of technology. In this regard, The Company creates integrated building systems, including the installation of advanced structured cabling systems. The Company specializes in wireless technology and a combination of various technologies to develop a cost effective network for a customer's wireless communication requirements. This includes Wi-Fi networks, point-to-point systems, cellular networks, in-building systems and two-way communication systems. The Company supports the integration of telecommunications, life safety, security and HVAC and design for future growth by building in additional capacity for expansion as new capabilities are added.

Basis of Presentation

The consolidated financial statements of WPCS International Incorporated, a Delaware corporation (“WPCS”) and its wholly and majority-owned subsidiaries, (collectively, the “Company”) included in this Report for the three and six months ended October 31, 2015 and 2014, reflect the accounts of current and former entities as either continued or discontinued operations, as discussed below.

Continued operations for the three and six months ended October 31, 2015 and 2014 include the results of operations of: Suisun City Operations, the Company’s only active operation; WPCS Incorporated, an inactive subsidiary; and WPCS International – Trenton, Inc. (“Trenton Operations”), which was closed in September 2013.

With the prior divestitures of The Pride Group (QLD) Pty Ltd. (“Pride”), BTX Trader, LLC (“BTX”) and WPCS Asia Limited, a 60% joint venture interest in Tai'an AGS Pipeline Construction Co. Ltd. (the “China Operations”), as well as the various transactions involving the sale of substantially all of the assets of each of WPCS International - Seattle, Inc. (“Seattle Operations”), WPCS International - Portland, Inc. (“Portland Operations”), WPCS International - Lakewood, Inc. (“Lakewood Operations”), WPCS International - Hartford, Inc. (“Hartford Operations”) and WPCS Australia Pty Ltd. and WPCS International – Brendale Pty Ltd (together, “Australia Operations”), the results of these subsidiaries are included as part of discontinued operations for the three and six months ended October 31, 2014 and 2015, for the China Operations only.

Notwithstanding the foregoing, the Company is in the process of dissolving the inactive domestic and international subsidiaries listed above, whose operations were discontinued due to the sale of substantially all of their assets.

The unaudited condensed consolidated financial information furnished herein reflects all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, considered necessary for a fair presentation of the financial position and the results of operations and cash flows of the Company for the periods presented. All intercompany accounts and transactions have been eliminated in consolidation. These unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. These interim condensed consolidated financial statements should be read in conjunction with the financial statements included in the Annual Report on Form 10-K for the fiscal year ended April 30, 2015.

The results of operations for the three and six months ended October 31, 2015 are not necessarily indicative of the results to be expected for the full fiscal year.