Registration Statement for Securities to Be Issued in Business Combination Transactions (s-4/a)

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As filed with the Securities and Exchange Commission on November 21, 2017
Registration No. 333-220891​
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
WPCS INTERNATIONAL INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware
4899
98-0204758
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification Number)
521 Railroad Avenue
Suisun City, California 94585
(707) 432-1300
(Address, including zip code, and telephone number, including
area code, of registrant’s principal executive offices)
Sebastian Giordano
Chief Executive Officer
521 Railroad Avenue
Suisun City, California 94585
(707) 432-1300
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies of all correspondence to:
Kenneth S. Rose, Esq.
Joel J. Goldschmidt, Esq.
Morse, Zelnick, Rose & Lander, LLP
825 Third Avenue, 16 th Floor
New York, NY 10022
(212) 838-5030
Spencer Richardson
Chief Executive Officer
DropCar, Inc.
1412 Broadway, Suite 2105
New York, NY 10018
(646) 342-1595
Kenneth R. Koch, Esq.
Daniel A. Bagliebter, Esq.
Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C.
666 Third Avenue
New York, NY 10017
(212) 935-3000
Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after the effectiveness of this registration statement and the satisfaction or waiver of all other conditions under the Merger Agreement described herein.
If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of  “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer
Non-accelerated filer ☐   (Do not check if a smaller reporting company) Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13c-4(i) (Cross-Border Issuer Tender Offer)
Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

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The information in this proxy statement/prospectus/information statement is not complete and may be changed. wpcs may not sell its securities pursuant to the proposed transactions until the Registration Statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus/information statement is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
Subject to completion, dated November 21, 2017
[WPCS LOGO] [DROPCAR LOGO]
PROPOSED MERGER
YOUR VOTE IS VERY IMPORTANT
To the Stockholders of WPCS International Incorporated and DropCar, Inc.:
WPCS International Incorporated, or WPCS, DC Acquisition Corporation, or Merger Sub, a wholly owned subsidiary of WPCS, and DropCar, Inc., or DropCar, have entered into an Agreement and Plan of Merger and Reorganization, dated as of September 6, 2017 and as amended as of October 10, 2017 and November 21, 2017, pursuant to which Merger Sub, will merge with and into DropCar, with DropCar surviving as a wholly-owned subsidiary of WPCS. We refer to the transaction described in the preceding sentence as the “Merger.” WPCS and DropCar believe that the Merger will enable both companies to enhance potential value for stockholders, and that both WPCS and DropCar will benefit from the Merger.
At the effective time of the Merger, each outstanding share of DropCar capital stock will be converted into the right to receive a specified number of shares of WPCS common stock and each outstanding warrant to purchase a share of DropCar capital stock will be converted into a right to receive warrants to purchase shares of WPCS common stock based on the “Exchange Ratio,” which will be calculated immediately prior to the consummation of the Merger pursuant to a formula set forth in the Merger Agreement and described in the attached proxy statement/prospectus/​information statement. It is currently anticipated that, at the closing of the Merger, the Exchange Ratio will be approximately 1.666 shares of WPCS common stock for each share of DropCar capital stock outstanding or issuable upon exercise of an outstanding DropCar warrant, prior to giving effect to a reverse split of the outstanding shares of WPCS common stock prior to or simultaneously with the consummation of the Merger. Upon a reverse split, the Exchange Ratio will be adjusted accordingly. In addition, the Exchange Ratio is subject to adjustment (i) if WPCS Net Cash (as defined in the Merger Agreement) is greater than or less than $419,000 at the time of the Merger and (ii) if the number of shares of WPCS common stock issuable to DropCar’s advisors in connection with the Merger (see below) is less than 7,461,944. Each share of WPCS common stock and preferred stock issued and outstanding at the time of the Merger will remain issued and outstanding and will be unaffected by the Merger. WPCS warrants and options that are unexercised immediately prior to the effective time of the Merger also will remain outstanding and unaffected by the Merger. Please see “ The Merger — Stock Options and Warrants ” beginning on page ___.
Based on the current capitalization of WPCS and DropCar, immediately after the Merger, DropCar securityholders, including those who purchase securities in the Merger Financing (described in the attached proxy statement/prospectus/information statement), together with DropCar advisors in connection with the Merger, Alpha Capital Anstalt and Palladium Capital Advisors, will own approximately 85% of the issued and outstanding shares of WPCS common stock and WPCS stockholders will own approximately 15% of the issued and outstanding shares of WPCS common stock. These percentages give effect to (i) the conversion of all shares of WPCS convertible preferred stock into shares of WPCS common stock, (ii) the dilutive effect of outstanding options to purchase shares of WPCS common stock outstanding at the time of the Merger and (iii) the issuances of the shares of WPCS common stock covered by the WPCS Meger Warrants (as defined below) that will be issued in exchange for DropCar warrants.
Shares of WPCS common stock are currently listed on The NASDAQ Capital Market under the symbol “WPCS.” WPCS has filed an initial listing application pursuant to NASDAQ’s “reverse merger” rules to have the WPCS common stock listed on The NASDAQ Capital Market upon consummation of the Merger. After completion of the Merger, WPCS will be renamed “DropCar, Inc.” and expects to trade on The NASDAQ Capital Market under the symbol “DCAR.” On _______ __, 2017, the last trading day before the date of this proxy statement/prospectus/information statement, the closing sale price of WPCS common stock as reported on the NASDAQ Capital Market was $____ per share.
WPCS is holding a special meeting of stockholders (the “Special Meeting”), to obtain the stockholder approvals necessary to complete the Merger and related matters. At the Special Meeting, which will be held at ______________________________________, at 9:30 a.m., local time, on ________ __, 2018, unless postponed or adjourned to a later date, WPCS will ask its stockholders to, among other things:

to consider and vote upon a proposal to approve the Agreement and Plan of Merger and Reorganization, dated as of September 6, 2017, as amended as of October 10, 2017 and November 21, 2017, by and among WPCS, Merger Sub and DropCar, a copy of which is attached as Annex A to this proxy statement/prospectus/​information statement (the “Merger Agreement”), and the transactions contemplated thereby, including the Merger and the issuance of shares of WPCS’s common stock to DropCar’s securityholders pursuant to the terms of the Merger Agreement;

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approve an amendment to the WPCS certificate of incorporation, as amended (the “WPCS Charter”) changing the WPCS corporate name to “DropCar, Inc.” (the “WPCS Name Change”);

approve an amendment to the WPCS Charter effecting a reverse stock split of WPCS’ issued and outstanding common stock within a range of every 1.5 to 10 shares (or any number in between) of outstanding WPCS common stock being combined and reclassified into one share of WPCS common stock (the “Reverse Stock Split”);

approve amendments to the WPCS International Incorporated Amended and Restated 2014 Equity Incentive Plan (the “Plan”), including, to increase the total number of shares of WPCS common stock currently available for issuance under the Plan by 6,450,000 shares, prior to giving effect to any reverse stock split to be effected in connection with the Merger;

consider and vote upon an adjournment of the Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the proposals set forth above; and

transact such other business as may properly come before the stockholders at the Special Meeting or any adjournment or postponement thereof.
These foregoing items are referred to herein as the WPCS Proposals.
As described in the accompanying proxy statement/prospectus/information statement, (i) certain DropCar stockholders who, as of November 15, 2017, in the aggregate owned or controlled 53.4% of the outstanding shares of DropCar capital stock entitled to vote, (ii) certain officers and directors of WPCS who own options to purchase shares of WPCS common stock that can be exercised at any time ( i.e. , David Allen, Charles Benton, Norm Dumbroff, Edward Gildea, Sebastian Giordano and Joshua Silverman) and (iii) certain holders of shares of WPCS convertible preferred stock and warrants to purchase shares of WPCS common stock that can be exercised at any time ( i.e. , Iroquois Capital Management LLC, Iroquois Capital Investment Fund, Brio Capital and Alpha Capital Anstalt), are parties to support agreements with WPCS and DropCar, respectively, whereby they have agreed to vote any shares they may own as of the record date for the determination of the stockholders entitled to vote at the Special Meeting in favor of the proposals described in this proxy statement/prospectus/information statement, subject to the terms of the support agreements.
In addition, following the registration statement on Form S-4, of which this proxy statement/prospectus/information statement is a part, being declared effective by the Securities and Exchange Commission (the “SEC”), and pursuant to the conditions of the Merger Agreement, the DropCar stockholders who are party to the support agreements will each execute an action by written consent of the DropCar stockholders (the “DropCar Stockholder Consent”) adopting the Merger Agreement, thereby approving the Merger and related transactions. These stockholders hold a sufficient number of shares of DropCar capital stock to adopt the Merger Agreement and no meeting of DropCar stockholders to adopt the Merger Agreement and approve the Merger and related transactions will be held.
After careful consideration, each of the WPCS board of directors (the “WPCS Board”) and the DropCar board of directors (the “DropCar Board”), have (i) determined that the transactions contemplated by the Merger Agreement are fair to, advisable and in the best interests of WPCS or DropCar, as applicable, and their respective stockholders, (ii) approved and declared advisable the Merger Agreement and the transactions contemplated thereby and (iii) determined to recommend, upon the terms and subject to the conditions set forth in the Merger Agreement, that its stockholders vote to adopt or approve, as applicable, the Merger Agreement and, therefore, approve the transactions contemplated therein. The WPCS Board recommends that its stockholders vote “FOR” the proposals described in this proxy statement/prospectus/information statement, and the DropCar Board recommends that its stockholders sign and return to DropCar the DropCar Stockholder Consent indicating their approval of the Merger and adoption of the Merger Agreement and related transactions.
More information about WPCS, DropCar and the Merger is contained in this proxy statement/prospectus/information statement. WPCS and DropCar urge you to read the accompanying proxy statement prospectus/information statement carefully and in its entirety. IN PARTICULAR, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER “RISK FACTORS” BEGINNING ON PAGE [  ].
WPCS and DropCar are excited about the opportunities the Merger brings to both WPCS’s and DropCar’s stockholders, and thank you for your consideration and continued support.
Sebastian Giordano
Spencer Richardson​
Chief Executive Officer
Chief Executive Officer​
WPCS International Incorporated
DropCar, Inc.​
Neither the Securities and Exchange Commission, nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this proxy statement/prospectus/information statement. Any representation to the contrary is a criminal offense.
The accompanying proxy statement/prospectus/information statement is dated _______ __, 2017, and is first being mailed to WPCS stockholders and DropCar stockholders on or about ________ __, 2017.

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WPCS INTERNATIONAL INCORPORATED
521 RAILROAD AVENUE
SUISUN CITY, CALIFORNIA 94585
(707) 432-1300
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On _________ __, 2018
Dear Stockholders of WPCS:
On behalf of the board of directors of WPCS International Incorporated, a Delaware corporation (“WPCS”), we are pleased to deliver this proxy statement/prospectus/information statement for the proposed merger between WPCS and DropCar, Inc., a Delaware corporation (“DropCar”), pursuant to which DC Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of WPCS (“Merger Sub”), will merge with and into DropCar, with DropCar surviving as a wholly-owned subsidiary of WPCS (the “Merger”). The special meeting of stockholders of WPCS (the “Special Meeting”) will be held on _______ __, 2018, at 9:30 a.m., local time, at __________________________, for the following purposes:
1.
To consider and vote upon a proposal to approve the Agreement and Plan of Merger and Reorganization, dated as of September 6, 2017, by and among WPCS, DropCar and Merger Sub, a copy of which is attached as Annex A to this proxy statement/prospectus/information statement (the “Merger Agreement”), and the transactions contemplated thereby, including the Merger and the issuance of shares of WPCS’s common stock to DropCar’s stockholders pursuant to the terms of the Merger Agreement, as amended by Amendment No. 1 to the Merger Agreement, dated as of October 10, 2017 to correct a scrivener’s error (“Amendment No. 1”) and as amended by Amendment No. 2 to the Merger Agreement, dated as of November 21, 2017, to increase the size of the board of directors of the combined company after the closing of the Merger;
2.
To approve an amendment to the WPCS Charter changing the WPCS corporate name to “DropCar, Inc.” in the form attached as Annex B ;
3.
To approve an amendment to the WPCS Charter effecting a reverse stock split of WPCS’ issued and outstanding common stock within a range of every 1.5 to 10 shares (or any number in between) of outstanding WPCS common stock being combined and reclassified into one share of WPCS common stock in the form attached as Annex C ;
4.
To approve amendments to the Plan, in the form attached as Annex D , to, among other things, increase the total number of shares of WPCS common stock currently available for issuance under the Plan by 6,450,000 shares, prior to giving effect to any reverse stock split to be effected in connection with the Merger;
5.
To consider and vote upon an adjournment of the Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the proposals set forth above; and
6.
To transact such other business as may properly come before the stockholders at the Special Meeting or any adjournment or postponement thereof.
Record Date
The WPCS Board has fixed _______ __, 201_ as the record date (the “Record Date”) for the determination of stockholders entitled to notice of, and to vote at, the Special Meeting and any adjournment or postponement thereof. Only holders of record of shares of WPCS common stock at the close of business on the Record Date are entitled to notice of, and to vote at, the Special Meeting. At the close of business on the Record Date, WPCS had ______ shares of common stock issued and outstanding and entitled to vote.
Your vote is important. The affirmative vote of the holders of a majority of the shares of WPCS common stock having voting power present in person or represented by proxy at the Special Meeting, assuming a quorum is present, is required for approval of WPCS Proposal Nos. 1, 4 and 5. The affirmative vote of the

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holders of a majority of outstanding shares of WPCS common stock entitled to vote on the Record Date for the Special Meeting is required for approval of WPCS Proposal Nos. 2 and 3. Each of WPCS Proposal Nos. 1, 2, 3 and 4 are conditioned upon each other and the approval of each such proposal is a condition to the completion of the Merger. Therefore, the Merger cannot be consummated without the approval of WPCS Proposal Nos. 1, 2, 3 and 4.
Even if you plan to attend the Special Meeting in person, WPCS requests that you sign and return the enclosed proxy to ensure that your shares will be represented at the Special Meeting if you are unable to attend. You may change or revoke your proxy at any time before it is voted at the Special Meeting.
THE WPCS BOARD HAS DETERMINED AND BELIEVES THAT EACH OF THE PROPOSALS OUTLINED ABOVE IS FAIR TO, IN THE BEST INTERESTS OF, AND ADVISABLE TO WPCS AND ITS STOCKHOLDERS AND HAS APPROVED EACH SUCH PROPOSAL. THE WPCS BOARD RECOMMENDS THAT WPCS STOCKHOLDERS VOTE “FOR” EACH OF THE WPCS PROPOSALS.
By Order of the WPCS Board,
Sebastian Giordano
Chief Executive Officer
Suisun City, California 94585
__________ __, 2017

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REFERENCES TO ADDITIONAL INFORMATION
This proxy statement/prospectus/information statement incorporates important business and financial information about WPCS that is not included in or delivered with this document. You may obtain this information without charge through the SEC website ( www.sec.gov ) or upon your written or oral request by contacting the chief financial officer of WPCS International Incorporated, 521 Railroad Avenue, Suisun City, California 94585 or by calling (707) 432-1300.
To ensure timely delivery of these documents, any request should be made no later than ___________ __, 2017 to receive them before the Special Meeting.
For additional details about where you can find information about WPCS, please see the section titled “ Where You Can Find More Information ” in this proxy statement/prospectus/information statement.

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ANNEX E — OPINION OF GORDIAN INVESTMENTS, LLC
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QUESTIONS AND ANSWERS ABOUT THE MERGER
The following section provides answers to frequently asked questions about the Merger. This section, however, provides only summary information. For a more complete response to these questions and for additional information, please refer to the cross-referenced sections.
Q:
What is the Merger?
A:
WPCS International Incorporated, or WPCS, DC Acquisition Corporation, or Merger Sub, a wholly-owned subsidiary of WPCS, and DropCar, Inc., or DropCar, have entered into an Agreement and Plan of Merger and Reorganization, dated September 6, 2017 and as amended as of October 10, 2017, and as of November 21, 2017 (the “Merger Agreement”). The Merger Agreement contains the terms and conditions of the proposed business combination of WPCS and DropCar. Under the Merger Agreement, Merger Sub, will merge with and into DropCar, with DropCar surviving as a wholly-owned subsidiary of WPCS. This transaction is referred to as the Merger. After the completion of the Merger, WPCS will change its corporate name to “DropCar, Inc.” as required by the Merger Agreement.
At the effective time of the Merger, (i) each outstanding share of DropCar capital stock will be converted into the right to receive shares of WPCS common stock and (ii) each outstanding warrant to purchase a share of DropCar capital stock (the “DropCar Warrants”) will be converted into a right to receive warrants to purchase shares of WPCS common stock (the “WPCS Merger Warrants”), in both cases based on the “Exchange Ratio,” which will be calculated immediately prior to the consummation of the Merger pursuant to a formula set forth in the Merger Agreement and described in the attached proxy statement/prospectus/information statement. It is currently anticipated that, at the closing of the Merger, the Exchange Ratio will be approximately 1.666 shares of WPCS common stock for each share of DropCar capital stock outstanding or issuable upon exercise of an outstanding DropCar warrant, prior to giving effect to a reverse split of the outstanding shares of WPCS common stock prior to or simultaneously with the consummation of the Merger. Upon a reverse split, the Exchange Ratio will be adjusted accordingly. In addition, the Exchange Ratio is subject to adjustment if (i) WPCS Net Cash (as defined in the Merger Agreement) is greater than or less than $419,000 at the time of the Merger and (ii) if the number of shares of WPCS common stock issuable to DropCar’s advisors in connection with the Merger (see below) is less than 7,461,944. Each share of WPCS common and preferred stock issued and outstanding at the time of the Merger will remain issued and outstanding and will be unaffected by the Merger. WPCS warrants and options that are unexercised immediately prior to the effective time of the Merger also will remain outstanding and will be unaffected by the Merger. Please see “ The Merger — Stock Options and Warrants ” beginning on page ___.
Immediately after the Merger, DropCar securityholders, including those who purchase securities in the Merger Financing (described in the attached proxy statement/prospectus/information statement), as well as DropCar’s advisors in connection with the Merger, Alpha Capital Anstalt (“Alpha”) and Palladium Capital Advisors (“Palladium”), will own approximately 85% of the issued and outstanding shares of WPCS common stock and WPCS stockholders, will own approximately 15% of the issued and outstanding shares of WPCS common stock. These percentages give effect to (i) the conversion of all shares of WPCS convertible preferred stock into shares of WPCS common stock, (ii) the dilutive effect of outstanding options to purchase shares of WPCS common stock outstanding at the time of the Merger and (iii) the issuances of the shares of WPCS common stock covered by the WPCS Merger Warrants. They do not give effect to the issuance of any shares of WPCS common stock issuable upon exercise of warrants to purchase shares of WPCS common stock outstanding at the time of the Merger (the “WPCS Warrants”).
The rules applicable to the calculation of the Exchange Ratio, which are described in the sections titled “ The Merger — Merger Consideration and Exchange Ratio ” beginning on page ____ and “ The Merger Agreement — Merger Consideration and Exchange Ratio ” beginning on page ____, are complex and circumstances as of the effective time of the Merger may result in an Exchange Ratio that differs from estimates in this proxy statement/prospectus/information statement.
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Q:
What will happen to WPCS if, for any reason, the Merger does not close?
A:
If, for any reason, the Merger does not close, the WPCS Board may elect to, among other things, dissolve or liquidate its assets, attempt to complete another strategic transaction like the Merger, attempt to sell or otherwise dispose of the various assets of WPCS or continue to operate the business of WPCS. If WPCS decides to dissolve and liquidate its assets, WPCS would be required to pay all its debts and contractual obligations, and to set aside certain reserves for potential future claims, and there can be no assurances as to the amount or timing of available cash left, if any, to distribute to stockholders after paying the debts and other obligations of WPCS and setting aside funds for reserves.
Q:
Why are the two companies proposing to merge?
A:
Following the Merger, WPCS and DropCar believe that the Merger will result in a company with multiple lines of businesses, one of which operates in the emerging automotive support services market. WPCS and DropCar believe that the combined company will have the following potential advantages: (i) a diversified business model; (ii) greater working capital; (iii) an experienced management team; and (iv) access to additional sources of capital.
Q:
Why am I receiving this proxy statement/prospectus/information statement?
A:
You are receiving this proxy statement/prospectus/information statement because you have been identified as a stockholder of WPCS or DropCar as of the applicable Record Date, and you are entitled, as applicable, to vote at the Special Meeting to approve the matters set forth above, or to sign and return the DropCar Stockholder Consent to adopt and approve the matters set forth in the DropCar Stockholder Consent. This document serves as:

a proxy statement of WPCS used to solicit proxies for the Special Meeting to vote on the matters set forth above;

a prospectus of WPCS used to offer shares of WPCS common stock in exchange for shares of DropCar capital stock in the Merger and issuable upon exercise of the WPCS Merger Warrants; and

an information statement of DropCar used to solicit the DropCar Stockholder Consent of its stockholders for approval of matters relating to the Merger.
Q:
What is required to consummate the Merger?
A:
To consummate the Merger, WPCS stockholders must approve the WPCS Proposals Nos. 1 through 4. Pursuant to the terms of the Merger Agreement, WPCS is also requesting that WPCS stockholders approve WPCS Proposal No. 5. Specifically, the WPCS Proposals are as follows:
1.
approve the Agreement and Plan of Merger and Reorganization among WPCS, DropCar and Merger Sub, dated September 6, 2017, as amended by Amendments No. 1 and No. 2, a copy of which is attached as Annex A , and the transactions contemplated thereby;
2.
approve an amendment to the WPCS Charter, in the form attached as Annex B , effecting the WPCS Name Change;
3.
approve an amendment to the WPCS Charter, in the form attached as Annex C , effecting the Reverse Stock Split;
4.
approve amendments to the Plan, in the form attached as Annex D , to, among other things, increase the total number of shares of WPCS common stock currently available for issuance under the Plan by 6,450,000 shares, prior to giving effect to any reverse stock split to be effected in connection with the Merger;
5.
to consider and vote on an adjournment of the Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the proposals set forth above.
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The presence, in person or represented by proxy, at the Special Meeting, of the holders of 33 1 3 % of the shares of WPCS common stock outstanding and entitled to vote at the Special Meeting is necessary to constitute a quorum at the meeting. Abstentions and broker non-votes will be counted towards a quorum. The affirmative vote of the holders of a majority of the shares of WPCS common stock having voting power present in person or represented by proxy at the Special Meeting, assuming a quorum is present, is required for approval of WPCS Proposal Nos. 1, 4 and 5. The affirmative vote of the holders of a majority of shares of WPCS common stock entitled to vote on the Record Date for the Special Meeting is required for approval of WPCS Proposal Nos. 2 and 3. Each of WPCS Proposal Nos. 1, 2, 3 and 4 are conditioned upon each other and the approval of each such proposal is a condition to the completion of the Merger. Therefore, the Merger cannot be consummated without the approval of Proposal Nos. 1, 2, 3 and 4.
Votes will be counted by the inspector of election appointed for the meeting, who will separately count “FOR” and “AGAINST” votes, abstentions and broker non-votes. Abstentions will be counted towards the vote total for each proposal and will have the same effect as “AGAINST” votes for WPCS Proposal Nos. 2 and 3, but will have no effect on WPCS Proposal Nos. 1, 4 and 5. Similarly, broker non-votes will have the same effect as “AGAINST” votes for WPCS Proposal Nos. 2 and 3, but will have no effect on WPCS Proposal Nos. 1, 4 and 5.
The adoption of the Merger Agreement and the approval of the Merger and related transactions by the stockholders of DropCar require the affirmative votes of the holders of a majority of the outstanding DropCar common stock and preferred stock, voting together as one class on an as-converted to common stock basis. In addition to the requirement of obtaining such stockholder approvals, each of the other closing conditions set forth in the Merger Agreement must be satisfied or waived.
Certain DropCar stockholders, who collectively own approximately 53.4% of the outstanding shares of DropCar capital stock as of November 15, 2017 on an as-converted to common stock basis, have entered into support agreements with WPCS, under which they have agreed to vote all the shares of DropCar capital stock that they own in favor of the Merger and against any “acquisition proposal,” as defined in the Merger Agreement. Following the registration statement on Form S-4, of which this proxy statement/prospectus/information statement is a part, being declared effective by the SEC and pursuant to the conditions of the Merger Agreement, DropCar stockholders who are party to the support agreements with WPCS will each execute the DropCar Stockholder Consent approving the Merger and related transactions. These stockholders hold a sufficient number of shares of DropCar capital stock to adopt the Merger Agreement, and no meeting of DropCar stockholders to adopt the Merger Agreement and approve the Merger and related transactions will be held. Nevertheless, stockholders of DropCar, including those who are parties to support agreements, are being requested to execute the DropCar Stockholder Consent providing such approvals.
For a more complete description of the closing conditions under the Merger Agreement, you are urged to read the section titled “ The Merger Agreement — Conditions to the Completion of the Merger ” in this proxy statement/prospectus/information statement.
Q:
What will DropCar securityholders receive in the Merger?
A:
In the Merger, DropCar securityholders, including holders of shares of DropCar common stock and preferred stock and holders of DropCar’s convertible notes, will be entitled to receive shares of WPCS common stock in exchange for their DropCar securities and holders of DropCar Warrants will be entitled to receive the WPCS Merger Warrants in exchange for their DropCar Warrants. Immediately following the consummation of the Merger, the DropCar securityholders, including those who purchase securities in the Merger Financing (described elsewhere in this proxy statement/prospectus/​information statement) as well as DropCar’s advisors in connection with the Merger, Alpha and Palladium, are expected to own approximately 85% of the issued and outstanding shares of WPCS common stock. This percentage takes into account (i) the conversion of all issued and outstanding shares of WPCS convertible preferred stock at the time of the Merger, (ii) the dilutive effect of all the issued and outstanding options (but not warrants) to purchase shares of WPCS common stock under the Treasury Method using an assumed price of  $2.50 per share of WPCS common stock and (iii) the shares of WPCS common stock issuable upon exercise of the WPCS Merger Warrants. They do not
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give effect to the issuance of any shares of WPCS common stock issuable upon exercise of WPCS Warrants outstanding at the time of the Merger. In addition, it assumes that (i) except for the Merger Financing, which is a condition to closing the Merger, WPCS will not need to raise additional capital to relist its shares of common stock on The NASDAQ Capital Market at the time of the Merger and (ii) WPCS Net Cash (as defined in the Merger Agreement) at the time of the Merger is $419,000.
The terms of the WPCS Merger Warrants will be identical with the terms of the DropCar Warrants for which they are exchanged except that the number of shares covered by the warrants and the exercise price per share will be adjusted for the Exchange Ratio.
For a more complete description of what DropCar securityholders will receive in the Merger, please see the sections titled “ Market Price and Dividend Information ” and “ The Merger Agreement — Merger Consideration and Exchange Ratio ” in this proxy statement/prospectus/information statement.
Q:
Who will be the directors of WPCS following the Merger?
A:
Immediately following the Merger the WPCS Board is expected to consist of eight directors, of which six will be designated by DropCar and two will be designated by WPCS. The DropCar designees are: Spencer Richardson, David Newman, Brian Harrington, Zvi Joseph, Solomon Mayer and Greg Schiffman. The WPCS designees are: Sebastian Giordano and Joshua Silverman.
Q:
Who will be the executive officers of WPCS immediately following the Merger?
A:
Immediately following the Merger, the executive management team of WPCS is expected to be as follows:
Name
Title
Spencer Richardson Chief Executive Officer
David Newman Chief Business Development Officer
Daniel Gelbtuch Vice President Corporate Finance and Communications
Leandro Larroulet Chief Information Officer
Q:
What are the material U.S. federal income tax consequences of the Reverse Stock Split to WPCS stockholders?
A:
The Reverse Stock Split described in WPCS Proposal No. 3 should constitute a “recapitalization” for U.S. federal income tax purposes. As a result, a U.S. Holder (as described in more detail in the section titled “ Matters Being Submitted to a Vote of WPCS Stockholders — WPCS Proposal No. 3: Approval of the Amendment of the Certificate of Incorporation of WPCS Effecting the Reverse Stock Split —  Material U.S. Federal Income Tax Consequences of the Reverse Stock Split ”) of WPCS common stock generally should not recognize gain or loss upon the Reverse Stock Split, except with respect to cash received in lieu of a fractional share of WPCS common stock, as discussed below in the section titled “ Matters Being Submitted to a Vote of WPCS Stockholders — WPCS Proposal No. 3: Approval of the Amendment of the Certificate of Incorporation of WPCS Effecting the Reverse Stock Split — Material U.S. Federal Income Tax Consequences of the Reverse Stock Split — Cash in Lieu of Fractional Shares ”. A U.S. Holder’s aggregate tax basis in the shares of WPCS common stock received pursuant to the Reverse Stock Split should equal the aggregate tax basis of the shares of the WPCS common stock surrendered (excluding any portion of such basis that is allocated to any fractional share of WPCS common stock), and such U.S. Holder’s holding period in the shares of WPCS common stock received should include the holding period in the shares of WPCS common stock surrendered. Treasury Regulations provide detailed rules for allocating the tax basis and holding period of the shares of WPCS common stock surrendered to the shares of WPCS common stock received in a recapitalization pursuant to the Reverse Stock Split. U.S. Holders of shares of WPCS common stock acquired on different dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares. For more information, please see the section titled “ Matters Being Submitted to a Vote of WPCS Stockholders — WPCS Proposal No. 3: Approval of the Amendment of the Certificate of Incorporation of WPCS Effecting the Reverse Stock Split — Material U.S. Federal Income Tax Consequences of the Reverse Stock Split ” on page ____.
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Q:
What are the material U.S. federal income tax consequences of the Merger to DropCar stockholders?
A:
Each of WPCS and DropCar intends the Merger to qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). In general, and subject to the qualifications and limitations set forth in the section titled “ The Merger — Material U.S. Federal Income Tax Consequences of the Merger ,” if the Merger qualifies as a “reorganization” within the meaning of Section 368(a) of the Code, the material tax consequences to U.S. Holders of DropCar common stock will be as follows:

a DropCar stockholder will not recognize gain or loss upon the exchange of DropCar common stock for WPCS common stock pursuant to the Merger, except to the extent of cash received in lieu of a fractional share of DropCar common stock as described below;

a DropCar stockholder who receives cash in lieu of a fractional share of WPCS common stock in the Merger will recognize capital gain or loss in an amount equal to the difference between the amount of cash received in lieu of a fractional share and the stockholder’s tax basis allocable to such fractional share;

a DropCar stockholder’s aggregate tax basis for the shares of WPCS common stock received in the Merger (including any fractional share interest for which cash is received) will equal the stockholder’s aggregate tax basis in the shares of DropCar common stock surrendered in the Merger; and

the holding period of the shares of WPCS common stock received by a DropCar stockholder in the Merger will include the holding period of the shares of DropCar common stock surrendered in exchange therefor.
Tax matters are very complicated, and the tax consequences of the Merger to a particular DropCar stockholder will depend on such stockholder’s particular circumstances. Accordingly, you are strongly urged to consult your personal tax advisor for a full understanding of the tax consequences of the Merger to you, including the applicability and effect of federal, state, local and non-U.S. income and other tax laws. For more information, please see the section titled “ The Merger — Material U.S. Federal Income Tax Consequences of the Merger ” beginning on page_____.
Q: As a WPCS stockholder, how does the WPCS Board recommend that I vote?
A:
After careful consideration, the WPCS Board recommends that WPCS stockholders vote.

“FOR” Proposal No. 1 to approve the Merger Agreement and the transactions contemplated thereby, including the Merger and the issuance of shares of WPCS common stock to DropCar securityholders in the Merger;

“FOR” Proposal No. 2 to approve an amendment to the WPCS Charter to effect the WPCS Name Change;

“FOR” Proposal No. 3 to approve an amendment to the WPCS Charter to effect the Reverse Stock Split;

“FOR” Proposal No. 4 to approve amendments to the Plan;

“FOR” Proposal No. 5 to adjourn the Special Meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1, 2, 3 or 4.
Q:
As a DropCar stockholder, how does the DropCar Board recommend that I vote?
A:
After careful consideration, the DropCar Board recommends that DropCar stockholders execute the DropCar Stockholder Consent indicating their vote in favor of the adoption of the Merger Agreement and the approval of the Merger and the transactions contemplated thereby.
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Q:
What risks should I consider in deciding whether to vote in favor of the Merger or to execute and return the DropCar Stockholder Consent, as applicable?
A:
You should carefully review the section of this proxy statement/prospectus/information statement titled “ Risk Factors ” beginning on page        , which sets forth certain risks and uncertainties related to the Merger, risks and uncertainties to which the combined company’s business will be subject, and risks and uncertainties to which each of WPCS and DropCar, as an independent company, is subject.
Q:
Who can vote at the Special Meeting?
A:
Only WPCS stockholders of record at the close of business on the Record Date, _____ __, 201_, will be entitled to vote at the Special Meeting. As of _____ __, 2017, there were __________ shares of WPCS common stock outstanding and entitled to vote.
Stockholder of Record: Shares Registered in Your Name
If, at the close of business on the Record Date, your shares of WPCS common stock were registered directly in your name with WPCS’s transfer agent, Issuer Direct Corporation, then you are a WPCS stockholder of record. As a WPCS stockholder of record, you may vote in person at the Special Meeting or vote by proxy. Whether or not you plan to attend the Special Meeting, please vote as soon as possible by completing and returning the enclosed proxy card or vote by proxy over the telephone or on the internet as instructed below to ensure your vote is counted.
Beneficial Owner: Shares Registered in the Name of a Broker or Bank
If, at the close of business on the Record Date, your shares of WPCS common stock were not held in your name, but rather in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the Special Meeting. As a beneficial owner, you have the right to direct your broker or other agent how to vote the shares in your account. You are also invited to attend the Special Meeting. However, because you are not the stockholder of record, you may not vote your shares in person at the Special Meeting unless you request and obtain a valid proxy from your broker or other agent.
Q:
How many votes do I have?
A:
On each matter to be voted upon, you have one vote for each share of WPCS common stock you own as of the Record Date.
Q:
What is the quorum requirement?
A:
A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if stockholders holding at least 33 1 3 % of the outstanding shares entitled to vote are present at the Special Meeting. On _____ __, 2017, there were __________ shares of WPCS common stock outstanding and entitled to vote. Accordingly, WPCS expects that the holders of at least _________ shares of WPCS common stock must be present at the Special Meeting for a quorum to exist. Your shares of WPCS common stock will be counted toward the quorum at the Special Meeting only if you attend the Special Meeting in person or are represented at the Special Meeting by proxy.
Abstentions and broker non-votes (as described below) will be counted towards the quorum requirement. If there is no quorum, the holders of a majority of shares present and entitled to vote at the meeting in person or represented by proxy may adjourn the Special Meeting to another date.
Q:
What are “broker non-votes”?
A:
If you hold shares beneficially in street name and do not provide your broker or other agent with voting instructions, your shares may constitute “broker non-votes.” Broker non-votes occur on a
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matter when a broker is not permitted to vote on that matter without instructions from the beneficial owner and instructions are not given. These matters are referred to as “non-routine” matters. Proposals Nos. 1, 2, 3 and 4 are non-routine matters. Broker non-votes will not be counted toward the vote total for any proposal at the Special Meeting.
Q:
How can I find out the results of the voting at the Special Meeting?
A:
WPCS will disclose final voting results in a Current Report on Form 8-K filed with the SEC within four business days after the Special Meeting. If final voting results are unavailable at that time, then WPCS intends to file a Current Report on Form 8-K to disclose preliminary voting results and file an amended Current Report on Form 8-K within four business days after the date the final voting results are available.
Q:
When do you expect the Merger to be consummated?
A:
The Merger is anticipated to occur in the first quarter of 2018 after the Special Meeting; however, the exact timing cannot be predicted. For more information, please see the section titled “ The Merger Agreement — Conditions to the Completion of the Merger ” in this proxy statement/prospectus/​information statement.
Q:
What do I need to do now?
A:
WPCS and DropCar urge you to read this proxy statement/prospectus/information statement carefully, including its annexes, and to consider how the Merger affects you.
If you are a WPCS stockholder of record, you may provide your proxy instructions in one of four different ways. First, you can attend the Special Meeting in person and WPCS will provide you with a ballot when you arrive at the meeting. Second, you can mail your signed proxy card in the enclosed return envelope. Third, you can provide your proxy instructions via telephone by following the instructions on your proxy card. Fourth, you can provide your proxy instructions via the Internet by following the instructions on your proxy card. If you hold your shares in “street name” (as described below), you may provide your proxy instructions via telephone or the internet by following the instructions on your vote instruction form. Please provide your proxy instructions only once, unless you are revoking a previously delivered proxy instruction, and as soon as possible so that your shares can be voted at the special meeting of WPCS stockholders.
If you are a stockholder of DropCar, you may execute and return the DropCar Stockholder Consent to DropCar in accordance with the instructions provided.
Q:
What happens if I do not return a proxy card or otherwise provide proxy instructions, as applicable?
A:
If you are a WPCS stockholder, the failure to return your proxy card or otherwise provide proxy instructions will reduce the aggregate number of votes required to approve WPCS Proposals Nos. 1, 2 and 5 and will have the same effect as voting against WPCS Proposals 3 and 4. Also, your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting.
Q:
May I vote in person at the special meeting of stockholders of WPCS?
A:
If your shares of WPCS common stock are registered directly in your name with WPCS’ transfer agent, you are considered the stockholder of record with respect to those shares and the proxy materials and proxy card are being sent directly to you by WPCS. If you are a WPCS stockholder of record, you may attend the special meeting of WPCS stockholders and vote your shares in person. Even if you plan to attend the Special Meeting in person, WPCS requests that you sign and return the enclosed proxy to ensure that your shares will be represented at the Special Meeting if you are unable to attend.
If your shares of WPCS common stock are held in a brokerage account or by another nominee, you are considered the beneficial owner of shares held in “street name,” and the proxy materials are being forwarded to you by your broker or other nominee together with a voting instruction card. As the
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beneficial owner, you are also invited to attend the special meeting of WPCS stockholders. Because a beneficial owner is not the stockholder of record, you may not vote these shares in person at the Special Meeting unless you obtain a legal proxy from the broker, trustee or nominee that holds your shares, giving you the right to vote the shares at the meeting.
Q:
When and where is the special meeting of WPCS stockholders being held?
A:
The Special Meeting will be held at _____________________________________, at ____ _.m., local time, on _______ __, 2018. Subject to space availability, all WPCS stockholders as of the Record Date, or their duly appointed proxies, may attend the meeting. Since seating is limited, admission to the meeting will be on a first-come, first-served basis.
Q:
If my WPCS shares are held in “street name” by my broker, will my broker vote my shares for me?
A:
Unless your broker has discretionary authority to vote on certain matters, your broker will not be able to vote your shares of WPCS common stock on matters requiring discretionary authority without instructions from you. If you do not give instructions to your broker, your broker can vote your WPCS shares with respect to “discretionary” items but not with respect to “non-discretionary” items. Discretionary items are proposals considered routine under the rules of The NASDAQ Capital Market on which your broker may vote shares held in “street name” in the absence of your voting instructions. On non-discretionary items for which you do not give your broker instructions, the WPCS shares will be treated as broker non-votes. It is anticipated that all the WPCS Proposals will be non-discretionary items. To make sure that your vote is counted, you should instruct your broker to vote your shares, following the procedures provided by your broker.
Q:
May I change my vote after I have submitted a proxy or provided proxy instructions?
A:
WPCS stockholders of record, other than those WPCS stockholders who are parties to support agreements, may change their vote at any time before their proxy is voted at the Special Meeting in one of three ways. First, a stockholder of record of WPCS can send a written notice to the Secretary of WPCS stating that it would like to revoke its proxy. Second, a stockholder of record of WPCS can submit new proxy instructions either on a new proxy card or via the Internet. Third, a stockholder of record of WPCS can attend the Special Meeting and vote in person. Attendance alone will not revoke a proxy. If a WPCS stockholder who owns WPCS shares in “street name” has instructed a broker to vote its shares of WPCS common stock, the stockholder must follow directions received from its broker to change those instructions.
Q:
Who is paying for this proxy solicitation?
A:
WPCS and DropCar will share equally the cost of printing and filing of this proxy statement/​prospectus/information statement and the proxy card up to a maximum of  $125,000 payable by DropCar. Arrangements will also be made with brokerage firms and other custodians, nominees and fiduciaries who are record holders of WPCS common stock for the forwarding of solicitation materials to the beneficial owners of WPCS common stock. WPCS will reimburse these brokers, custodians, nominees and fiduciaries for the reasonable out-of-pocket expenses they incur relating to the forwarding of solicitation materials. WPCS has retained Alliance Advisors LLC to assist it in soliciting proxies using the means referred to above. WPCS will pay the fees of Alliance Advisors LLC, which WPCS expects to be approximately $12,000, plus reimbursement of out-of-pocket expenses.
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Q:
Who can help answer my questions?
A:
If you are a WPCS stockholder and would like additional copies of this proxy statement/prospectus/​information statement without charge or if you have questions about the Merger, including the procedures for voting your shares, you should contact:
WPCS International Incorporated
521 Railroad Avenue
Suisun City, CA 94585
Telephone: (707) 432-1300
Attention: Sebastian Giordano
Email:
Sebastian.giordano@wpcs.com
If you are a DropCar stockholder and would like additional copies of this proxy statement/prospectus/​information statement without charge or if you have questions about the Merger, including the procedures for voting your shares, you should contact:
DropCar, Inc.
1412 Broadway, Suite 2105
New York, NY 10018
Telephone: (646) 342-1595
Attention: Spencer Richardson
Email: spencer@dropcar.com
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PROSPECTUS SUMMARY
This summary highlights selected information from this proxy statement/prospectus/information statement and may not contain all the information that is important to you. To better understand the Merger, the proposals being considered at the Special Meeting and the DropCar stockholder actions that are the subject of the DropCar Stockholder Consent, you should read this entire proxy statement/prospectus/information statement carefully, including the Merger Agreement and the other annexes to which you are referred herein. For more information, please see the section titled “Where You Can Find More Information” in this proxy statement/prospectus/information statement.
The Companies
WPCS International Incorporated
521 Railroad Avenue
Suisun City, CA 94585
(707) 432-1300
WPCS is a full-service low voltage contractor that specializes in the installation and service of voice and data networks, security systems, audio-visual solutions, and distributed antenna systems, provides experienced project management and delivers complex projects to key vertical markets that include healthcare, education, transportation, energy and utilities, oil and gas, manufacturing, commercial real estate, finance and government.
DropCar, Inc.
1412 Broadway
New York, New York 10018
(646) 342-1595
DropCar is a privately-held provider of automotive logistics and concierge services for both consumers and the automotive industry. In 2015, DropCar launched its cloud-based Vehicle Support Platform and mobile application (“app”) to assist consumers and automotive-related companies reduce the costs, hassles and inefficiencies of owning a car, or fleet of cars, in urban centers. To date, DropCar operates primarily in the New York metropolitan area and plans to expand its territory in the future.
DC Acquisition Corporation
521 Railroad Avenue
Suisun City, CA 94585
(707) 432-1300
Merger Sub is a wholly-owned subsidiary of WPCS and was formed solely for the purpose of the Merger.
The Merger (see page __)
If the Merger is completed, Merger Sub will merge with and into DropCar, with DropCar surviving as a wholly-owned subsidiary of WPCS.
At the effective time of the Merger, each share of DropCar common stock will be converted into the right to receive shares of WPCS common stock in accordance with the Exchange Ratio. It is currently anticipated that, at the closing of the Merger, the Exchange Ratio will be approximately 1.666 shares of WPCS’s common stock for each share of DropCar capital stock outstanding or issuable upon exercise of outstanding DropCar Warrants prior to giving effect to a reverse split of the outstanding shares of WPCS common stock prior to or simultaneously with the consummation of the Merger. Upon a reverse split, the Exchange Ratio will be adjusted accordingly. The Exchange Ratio is determined pursuant to a formula set forth in the Merger Agreement and described in this proxy statement/prospectus/information statement and is subject to adjustment.
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Each share of WPCS common stock and preferred stock issued and outstanding at the time of the Merger will remain issued and outstanding and will be unaffected by the Merger. WPCS Warrants and options that are unexercised prior to the effective time of the Merger will remain outstanding as well and will be unaffected by the Merger. Please see “ The Merger — Stock Options and Warrants ” beginning on page ___.
For a more complete description of the Exchange Ratio, please see the section titled “ The Merger Agreement — Merger Consideration and Exchange Ratio ” beginning on page _____.
The Merger will be completed as promptly as practicable after all the conditions to completion of the Merger are satisfied or waived, including the approval of the stockholders of WPCS and DropCar. WPCS and DropCar are working to complete the Merger as quickly as practicable. However, WPCS and DropCar cannot predict the exact timing of the completion of the Merger because it is subject to various conditions. After completion of the Merger, assuming WPCS receives the required stockholder approval of WPCS Proposal No. 2, WPCS will be renamed “DropCar, Inc.”.
Reasons for the Merger (see pages __ and __)
Following the Merger, the combined company will have multiple lines of businesses, including one in the emerging vehicle support services market. WPCS and DropCar believe that the combined company will have the following potential advantages:

it will have a diversified business platform;

its common stock will be listed on an exchange and publicly traded,

it will be led by an experienced senior management team and an expanded board of directors; and

it will be well-capitalized.
Each of the WPCS Board and the DropCar Board also considered other reasons for the Merger, as described herein. For example, the WPCS Board considered, among other things:

the strategic alternatives of WPCS to the Merger, including potential transactions that could have resulted from discussions that WPCS management conducted with other potential merger parties;

the consequences of current market conditions, WPCS’ current liquidity position, its depressed stock price and the likelihood that the resulting circumstances for the company would not change for the benefit of the WPCS stockholders in the foreseeable future on a stand-alone basis;

the risks of continuing to operate WPCS on a stand-alone basis, including the fact that it has only one line of business;

WPCS management’s belief that it would be difficult to obtain additional equity or debt financing on acceptable terms, if at all;

the opportunity for WPCS stockholders to participate in the potential value that may result from DropCar’s development and the potential increase in value of the combined company following the Merger; and

the opinion of Gordian Investments, LLC (“Gordian”), delivered to the WPCS Board (in its capacity as such) that, as of September 5, 2017 and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations set forth in the opinion, the Exchange Ratio for the conversion of DropCar capital stock into shares of WPCS common stock pursuant to the Merger Agreement was fair to the WPCS stockholders from a financial point of view.
In addition, the DropCar Board approved the Merger based on a number of factors, including the following:

the potential to provide DropCar stockholders with greater liquidity by owning stock in a public company;
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the potential of access to the public market capitals, including sources of capital from a broader range of investors to support the growth and development of its business than it could otherwise obtain if it continued to operate as a privately-held company;

the expectation that the Merger would be a more time- and cost-effective means to access capital than other options considered, including an initial public offering;

the fact that shares of WPCS common stock issued to DropCar stockholders will be registered pursuant to a registration statement on Form S-4 by WPCS and will become freely tradable for DropCar’s stockholders who are not affiliates of DropCar;

the likelihood that the Merger will be consummated on a timely basis;

the terms and conditions of the Merger Agreement, including, without limitation, the following:

the determination that the Exchange Ratio, is appropriate to reflect the expected relative percentage ownership of WPCS securityholders, DropCar securityholders including the holders of the securities sold in the Merger Financing;

the expectation that the Merger will be treated as a reorganization for U.S. federal income tax purposes, with the result that the DropCar stockholders will not recognize taxable gain or loss for U.S. federal income tax purposes upon the exchange of shares of DropCar capital stock for shares of WPCS common stock pursuant to the Merger; and

that the potential termination fee of  $250,000 payable by WPCS to DropCar and the circumstances when such fee may be payable, were reasonable.
Opinion of the WPCS Financial Advisor (see page__)
In June 2017, the Special Committee of the WPCS Board engaged Gordian to provide a written opinion to the Special Committee and the WPCS Board as to the fairness, from a financial point of view, of the Merger. At the September 5, 2017 meeting of the Special Committee and the WPCS Board, Gordian rendered its oral opinion, subsequently confirmed by delivery of a written opinion dated September 5, 2017, to the Special Committee that, as of the date of such opinion, and based upon the assumptions made, procedures followed, matters considered, and qualifications and limitations of the review set forth in its written opinion, the Merger is fair, from a financial point of view, to the WPCS stockholders as more fully described below under the caption “ The Merger — Opinion of WPCS Financial Advisor .”
The full text of the written opinion of Gordian, dated September 5, 2017, which sets forth, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations of the review undertaken in connection with such opinion, is attached as Annex E . Holders of WPCS common stock are urged to read this opinion carefully and in its entirety. Gordian’s opinion was provided for the sole benefit and use of the WPCS Board (in its capacity as such) in connection with its consideration of the Merger and addresses only the fairness to the WPCS stockholders, from a financial point of view, of the terms of the Merger. It does not address any other aspects of the Merger and does not constitute a recommendation as to how holders of WPCS common stock or DropCar common stock should vote or act in connection with the Merger. Specifically, the Exchange Ratio was determined through negotiations between WPCS and DropCar and not pursuant to any recommendation of Gordian. The summary of the opinion set forth in the section of this proxy statement/prospectus/information statement captioned “The Merger — Opinion of WPCS Financial Advisor” is qualified in its entirety by reference to the full text of the opinion.
Interests of Certain Directors, Officers and Affiliates of WPCS and DropCar (see pages ___ and ___)
In considering the recommendation of the WPCS Board with respect to issuing shares of WPCS common stock pursuant to the Merger Agreement and the other matters to be acted upon by WPCS stockholders at the Special Meeting, WPCS stockholders should be aware that certain members of the WPCS Board and executive officers of WPCS have interests in the Merger that may be different from, or in addition to, interests they have as WPCS stockholders. For example, upon completion of the Merger, Sebastian Giordano and David Allen, WPCS’ chief executive officer and chief financial officer, respectively, will be entitled to change in control payments and stock options. Furthermore, Mr. Giordano and Joshua
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Silverman, both current members of the WPCS Board, will continue to serve on the WPCS Board after completion of the Merger. Finally, all the officers and directors of WPCS have entered into agreements with WPCS that “toll” the exercise period of their options (but not beyond the date of expiration of their options) for a period equal to which they agreed to “lock-up” their shares of WPCS common stock.
The senior executive officers of WPCS ( i.e. , Sebastian Giordano and David Allen), certain WPCS directors ( i.e., Charles Benton, Norm Dumbroff, Edward Gildea and Joshua Silverman) and certain holders of shares of WPCS convertible preferred stock and warrants to purchase shares of WPCS common stock ( i.e., Alpha, Iroquois Capital Management LLC, Iroquois Capital Investment Fund and Brio Capital) entered into support agreements with DropCar in connection with the Merger. As of November 15, 2017, none of these persons owned any shares of WPCS common stock. However, at such date they had the right to acquire, either by exercising their right to purchase shares of WPCS common stock or to convert shares of WPCS of convertible preferred stock into shares of WPCS common stock, up to 5,174,102 shares of WPCS common stock (prior to taking into account any limitations on their right to convert or exercise). The support agreements are discussed in greater detail in the section titled “ Agreements Related to the Merger — Support Agreements ” in this proxy statement/prospectus/information statement.
In considering the recommendation of the DropCar Board with respect to consenting to the adoption of the Merger Agreement and the approval of the Merger and related transactions, DropCar stockholders should be aware that certain members of the DropCar Board and executive officers of DropCar have interests in the Merger that may be different from, or in addition to, interests they have as DropCar stockholders. For example, some of DropCar’s directors and executive officers are expected to become directors and executive officers of the combined company upon the closing of the Merger. Specifically, Spencer Richardson and David Newman, both currently executive officers and directors of DropCar, are expected to become executive officers and directors of WPCS upon the closing of the Merger, with Mr. Richardson serving as the president and chief executive officer, and Mr. Newman serving as chief business development officer. Certain DropCar significant stockholders also entered into support agreements with WPCS in connection with the Merger. The support agreements are discussed in greater detail in the section titled “ Agreements Related to the Merger — Support Agreements ” beginning on page ___.
Management Following the Merger (see page ____)
Effective as of the closing of the Merger, the current senior executives of DropCar named in the table below are expected to become the executive officers of WPCS:
Name
Title
Spencer Richardson Chief Executive Officer
David Newman Chief Business Development Officer
Daniel Gelbtuch Vice President Corporate Finance and Communications
Leandro Larroulet Chief Information Officer
Overview of the Merger Agreement and Agreements Related to the Merger Agreement
Merger Consideration and Exchange Ratio (see page ____)
At the effective time of the Merger:

Each share of DropCar capital stock outstanding immediately prior to the effective time of the Merger will automatically be converted into the right to receive a number of shares of WPCS common stock calculated according to the Exchange Ratio, which is currently estimated to be approximately 1.666, prior to giving effect to any adjustment on account of  (i) a reverse split of the outstanding shares of WPCS common stock immediately prior to or simultaneously with the Merger, (ii) WPCS Net Cash (as defined in the Merger Agreement) at the time of the Merger being more or less than $419,000 and (iii) the number of shares of WPCS common stock issuable to DropCar’s advisors in connection with the Merger (see below) is less than 7,461,944. At the present time, WPCS believes that the Exchange Ratio is likely to change for the following reasons.
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First, WPCS believes that, in order for it to qualify for listing on The NASDAQ Capital Market post-Merger, it will have to effect a reverse stock split. The exact ratio of the reverse stock split will not be known until proximate to the time of the closing of the Merger. Second, the WPCS Net Cash is likely to be higher than $419,000 at the time of the closing of the Merger. This will result in fewer shares of WPCS common stock being issued in the Merger in exchange for shares of DropCar capital stock and will benefit WPCS stockholders. Third, the number of shares of WPCS common stock to be issued in the Merger to DropCar’s advisors in connection with the Merger is likely to be less than 7,461,944 since it is anticipated that Alpha will be required to fund less than the entire amount of the Merger Financing.

Each DropCar Warrant outstanding and unexercised immediately prior to the effective time of the Merger will be exchanged for WPCS Merger Warrants.
Immediately after the Merger, DropCar securityholders, including investors who participate in the Merger Financing, and DropCar’s advisors in connection with the Merger, Alpha and Palladium, are expected to own approximately 85% of the issued and outstanding shares of WPCS common stock and WPCS stockholders are expected to own approximately 15% of the issued and outstanding shares of WPCS common stock. These percentages give effect to (i) the conversion of all shares of WPCS convertible preferred stock into shares of WPCS common stock, (ii) the dilutive effect of outstanding options to purchase shares of WPCS common stock outstanding on September 6, 2017, the date of the Merger Agreement and (iii) the issuances of the shares of WPCS common stock covered by the WPCS Merger Warrants. They do not give effect to the issuance of any shares of WPCS common stock issuable upon exercise of WPCS Warrants. These percentages will change if  (i) the Merger Financing is insufficient to qualify the shares of WPCS common stock for listing on The NASDAQ Capital Market at the time of the Merger and either WPCS and/or DropCar is required to raise additional funds for that purpose or (ii) WPCS Net Cash is more or less than $419,000.
The table below reflects the changes in equity allocation, the number of shares of WPCS common stock that will be issued in the Merger and exchanged for issued and outstanding shares of DropCar capital stock and the Exchange Ratio on both a pre- and post-split basis based on various values for WPCS Net Cash at the time of the Merger. WPCS currently estimates that WPCS Net Cash at the time of the Merger will be between $600,000 and $800,000.
Equity Allocation
Pre-Split
Post-Split (1-for-2)
Post-Split (1-for-3)
Post-Split (1-for-4)
WPCS
DropCar
Merger
Shares (1)
Exchange
Ratio (2)
Merger
Shares (1)
Exchange
Ratio (2)
Merger
Shares (1)
Exchange
Ratio (2)
Merger
Shares (1)
Exchange
Ratio (2)
$ 419,000 15.0 % 85.0 % 34,672,571 1.67:1 17,336,285 0.835:1 11,557,524 0.557:1 8,668,143 0.4175:1
$ 500,000 15.1 % 84.9 % 34,402,430 1.65:1 17,201,215 0.825:1 11,467,477 0.550:1 8,600,607 0.4125:1
$ 600,000 15.2 % 84.8 % 34,135,844 1.64:1 17,067,922 0.820:1 11,378,615 0.533:1 8,533,961 0.4100:1
$ 700,000 15.4 % 84.6 % 33,613,058 1.61:1 16,806,529 0.805:1 11,204,353 0.537:1 8,403,264 0.4025:1
$ 800,000 15.5 % 84.5 % 33,356,724 1.59:1 16,678,362 0.795;1 11,118,908 0.530:1 8,339,181 0.3975:1
$ 900,000 15.7 % 84.3 % 32,853,852 1.56:1 16,426,926 0.780:1 10,951,284 0.520:1 8,213,463 0.3900:1
$1,000,000 15.8 % 84.2 % 32,607,191 1.55:1 16,303,595 0.775:1 10,869,064 0.517:1 8,151,798 0.3875:1
(1)
Based on the applicable equity allocation and 6,118,689 shares of WPCS common stock deemed issued and outstanding. Includes (i) shares to be issued to pre-Merger DropCar securityholders in exchange for their shares of DropCar capital stock, (ii) shares to be issued to the DropCar Merger advisors, Alpha and Palladium, and (iii) shares to be issued upon exercise of the WPCS Merger Warrants.
(2)
The Exchange Ratio is based on the following assumptions: (i) at the time of the Merger, there will be 16,311,282 shares of DropCar capital stock actually issued and outstanding on a fully diluted basis, including 2,661,555 shares of DropCar common stock issuable upon exercise of DropCar Warrants; and (ii) an aggregate of 7,461,944 shares of WPCS common stock will be issued to the DropCar advisors in connection with Merger — 6,442,163 to Alpha and 1,019,781 to Palladium. To the extent the shares of WPCS common stock that are actually issued to Alpha is less than 6,442,163, the
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difference will be added to the number of shares of WPCS common stock issuable to the DropCar securityholders and will increase the Exchange Ratio. In addition, the actual number of shares of DropCar capital stock issued and outstanding at the time of the Merger may vary depending on the terms of the Merger Financing (as defined below) and, if necessary, any additional financing.
There will be no adjustment to the total number of shares of WPCS common stock that DropCar stockholders will be entitled to receive for changes in the market price of WPCS common stock.
DropCar will advise its stockholders in writing of the final Exchange Ratio contemporaneous with the closing of the Merger.
Treatment of WPCS Warrants and Stock Options (see page ___)
All WPCS Warrants and options to purchase shares of WPCS’s common stock that are outstanding at the effective time of the Merger will remain outstanding following the effective time of the Merger.
Treatment of DropCar Convertible Preferred Stock, Convertible Notes, Options and Warrants (see page ___)
In the Merger, (i) all outstanding shares of DropCar convertible preferred stock and convertible notes will be exchanged for shares of WPCS common stock in accordance with their respective terms and the Exchange Ratio, and (ii) all outstanding DropCar Warrants will be exchanged for WPCS Merger Warrants with the number of shares and the exercise price per share converted in accordance with the Exchange Ratio.
Conditions to the Completion of the Merger (see page ___)
Consummation of the Merger, is subject to various closing conditions set forth in the Merger Agreement. Included among the closing conditions are the following:

neither WPCS nor DropCar, and their respective subsidiaries, shall have experienced any change, event, circumstance or development, which by itself or in the aggregate, has had or would reasonably be expected to have a material adverse effect on its business, financial condition, assets, liabilities or results of operations;

the WPCS stockholders must approve WPCS Proposal Nos. 1, 2, 3 and 4;

the DropCar stockholders must approve the Merger and adopt the Merger Agreement;

DropCar must consummate the Merger Financing prior to or simultaneously with the closing of the Merger;

the WPCS common stock must be approved for listing on The NASDAQ Capital Market; and

the SEC must have declared effective the registration statement on Form S-4 of which this proxy statement/prospectus/information statement is a part and no stop order suspending the effectiveness of the registration statement on Form S-4 of which this proxy statement/prospectus/​information statement is a part shall have been issued and remain pending.
Non-Solicitation (see page ___)
The Merger Agreement contains provisions prohibiting WPCS and DropCar from seeking a competing transaction, subject to specified exceptions described in the Merger Agreement. Under these “non-solicitation” provisions, each of WPCS and DropCar has agreed that neither it nor its subsidiaries, nor any of its officers, directors, employees, representatives, affiliates, advisors or agents will directly or indirectly:

solicit, initiate, or knowingly encourage, induce or facilitate the communication, making, submission or announcement of any competing proposal or take any action that could reasonably be expected to lead to a competing proposal;

engage in discussions or negotiations with any person with respect to any competing proposal;

furnish any non-public information regarding to any person in connection with or in response to, a competing proposal;
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approve, endorse or recommend any competing proposal, subject to the terms and conditions in the Merger Agreement; or

execute or enter into any letter of intent or similar document or any contract contemplating or otherwise relating to any competing proposal.
Notwithstanding the foregoing, WPCS may furnish non-public information regarding WPCS and its subsidiaries to, and enter into discussions or negotiations with, any person in response to a bona fide written competing proposal from such person, if, among other things, the WPCS Board concludes in good faith, based on the advice of outside legal counsel, that the failure to take such action is reasonably likely to be inconsistent with the fiduciary duties of the WPCS Board under the Delaware General Corporation Law (the “DGCL”).
Termination of the Merger Agreement (see page ___)
Either WPCS or DropCar can terminate the Merger Agreement under certain circumstances, which would prevent the Merger from being consummated.
Termination Fee (see page ___)
The Merger Agreement provides that, upon termination of the Merger Agreement under specified circumstances, each of WPCS and DropCar may be required to pay the other party a termination fee of $250,000 or, in certain circumstances, up to $125,000 in expense reimbursements.
Merger Financing (see page ___)
Under the terms of the Merger Agreement, consummation of the Merger is conditioned upon DropCar raising up to $5 million, but not less than $4 million, in equity financing (the “Merger Financing”).
On September 5, 2017, DropCar and Alpha, an affiliate of DropCar, entered into an agreement pursuant to which, among other things, Alpha agreed to fund the Merger Financing, in exchange for an agreement to issue Alpha 18.58% of the Merger consideration; provided, however , that Alpha’s obligation shall be reduced dollar-for-dollar by any third-party investors investing in the Merger Financing but Alpha’s consideration for this commitment shall in no event be reduced to less than 7.5% of the Merger consideration.
Support Agreements (see page ___)
Certain DropCar stockholders, who collectively owned approximately 53.4% of the outstanding shares of DropCar capital stock on an as-converted to common stock basis as of November 15, 2017, have entered into support agreements with WPCS under which such securityholders have agreed to vote in favor of the Merger and the Merger Agreement and against any competing transaction.
The senior executive officers of WPCS ( i.e. , Sebastian Giordano and David Allen), certain WPCS directors ( i.e., Charles Benton, Norm Dumbroff, Edward Gildea and Joshua Silverman) and certain holders of shares of WPCS convertible preferred stock and warrants to purchase shares of WPCS common stock ( i.e., Alpha, Iroquois Capital Management LLC, Iroquois Capital Investment Fund and Brio Capital) have entered into support agreements with DropCar pursuant to which they have agreed to vote any shares of WPCS common stock in favor of the Merger Agreement and the Merger and against any competing transaction, to the extent they are entitled to vote such shares at the Special Meeting. As of November 15, 2017, none of these persons owned any shares of WPCS common stock. However, at such date they had the right to acquire, either by exercising their right to purchase shares of WPCS common stock or to convert shares of WPCS of convertible preferred stock into shares of WPCS common stock, approximately 4,276,000 shares of WPCS common stock, representing approximately 46% of the outstanding shares of WPCS common stock on an as-converted to common stock basis.
Each securityholder executing a support agreement has made representations and warranties to WPCS or DropCar, as applicable, regarding ownership and unencumbered title to the shares subject to such agreement, such stockholder’s power and authority to execute the support agreement, due execution and enforceability of the support agreement, and ownership and unencumbered title to the shares. Unless
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otherwise waived, all the support agreements prohibit the transfer, sale, assignment, gift or other disposition by the stockholder of their respective shares of WPCS or DropCar capital stock, or the entrance into an agreement or commitment to do any of the foregoing, subject to specified exceptions. Each DropCar stockholder executing a support agreement has also waived its statutory appraisal rights in connection with the Merger.
The support agreements will terminate at the earlier of the effective time of the Merger or the termination of the Merger Agreement in accordance with its terms.
Lock-up/“Dribble-Out” Agreements (see page ___)
The officers, directors and certain other securityholders of DropCar have entered into lock-up agreements, pursuant to which they have agreed not to, except in limited circumstances, offer, pledge, sell, contract to sell, sell any option to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, any DropCar securities or shares of WPCS common stock, including, as applicable, shares received in the Merger and issuable upon exercise of certain warrants and options. The length of the lock-up period varies from three months to one year depending on the status of the particular stockholder. In addition, other stockholders of DropCar have agreed to lock-up half of their shares with 25% of those shares being released from the lock-up restrictions every thirty (30) days.
The DropCar stockholders who have executed lock-up agreements as of November 15, 2017 owned, in the aggregate, approximately 30.6% of the shares of DropCar’s outstanding capital stock on an as-converted to common stock basis. The DropCar stockholders who have executed “dribble-out” agreements as of November 15, 2017 owned, in the aggregate, approximately 67.4% of the shares of DropCar’s outstanding capital stock on an as-converted to common stock basis.
The current executive officers and directors of WPCS, none of whom own any issued and outstanding shares of capital stock of WPCS, but who own options to acquire approximately 2,658,000 shares of WPCS common stock, representing approximately 34.1% of the outstanding shares of WPCS common stock on an as-converted to common stock basis, have entered into similar lock-up agreements.
Regulatory Approvals (see page _____)
WPCS must comply with applicable federal and state securities laws and the rules and regulations of The NASDAQ Capital Market in connection with the issuance of shares of WPCS common stock and the filing of this proxy statement/prospectus/information statement with the SEC. As of the date hereof, the registration statement on Form S-4 of which this proxy statement/prospectus/information statement is a part has not become effective.
Material U.S. Federal Income Tax Consequences of the Merger (for more information, see page ___)
Each of WPCS and DropCar intends the Merger to qualify as a reorganization within the meaning of Section 368(a) of the Code. In general, and subject to the qualifications and limitations set forth in the section titled “ The Merger — Material U.S. Federal Income Tax Consequences of the Merger ,” if the Merger qualifies as a “reorganization” within the meaning of Section 368(a) of the Code, the material tax consequences to U.S. Holders of DropCar common stock will be as follows:

a DropCar stockholder will not recognize gain or loss upon the exchange of DropCar common stock for WPCS common stock pursuant to the Merger, except to the extent of cash received in lieu of a fractional share of WPCS common stock as described below;

a DropCar stockholder who receives cash in lieu of a fractional share of WPCS common stock in the Merger will recognize capital gain or loss in an amount equal to the difference between the amount of cash received in lieu of a fractional share and the stockholder’s tax basis allocable to such fractional share;

a DropCar stockholder’s aggregate tax basis for the shares of WPCS common stock received in the Merger (including any fractional share interest for which cash is received) will equal the stockholder’s aggregate tax basis in the shares of DropCar common stock surrendered in the Merger; and
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the holding period of the shares of WPCS common stock received by a DropCar stockholder in the Merger will include the holding period of the shares of DropCar common stock surrendered in exchange therefor.
Tax matters are very complicated, and the tax consequences of the Merger to a particular DropCar stockholder will depend on such stockholder’s circumstances. Accordingly, you are strongly urged to consult your tax advisor for a full understanding of the tax consequences of the Merger to you, including the applicability and effect of federal, state, local and non-U.S. income and other tax laws.
NASDAQ Stock Market Listing (see page ___)
WPCS common stock is currently listed on The NASDAQ Capital Market. WPCS has filed an initial listing application pursuant to NASDAQ’s “reverse merger” rules to have the WPCS common stock listed on The NASDAQ Capital Market immediately upon consummation of the Merger. If such application is accepted, WPCS anticipates that shares of WPCS common stock will be listed on The NASDAQ Capital Market following the Closing under the trading symbol “DCAR.”
Anticipated Accounting Treatment (see page ___)
The Merger will be treated by WPCS as a reverse merger under the acquisition method of accounting in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. For accounting purposes, DropCar will be treated as acquiring WPCS in the Merger.
The analysis that supported the conclusion that DropCar is the accounting acquirer in the Merger is as follows:
At the effective time of the Merger, DropCar will be merged with and into Merger Sub, a wholly owned acquisition subsidiary of WPCS, with DropCar surviving as a wholly owned subsidiary of WPCS. After the Merger, WPCS will primarily focus on the business of DropCar to deliver a comprehensive Vehicle Support Platform (VSP) to consumers, real estate developers, and automotive partners. WPCS will continue DropCar’s business operations as a publicly-traded company. DropCar is considered the acquirer for accounting purposes, and WPCS’s historical financial statements before the Merger will be replaced with the historical financial statements of DropCar before the Merger in all subsequent filings with the SEC. In connection with the Merger, each share of DropCar capital stock will be converted into the right to receive a specified number of shares of WPCS common stock. In a business combination effected primarily by exchanging equity interests, the acquirer usually is the entity that issues its equity interests ( i.e. , WPCS). In accordance with Accounting Standards Codification (“ASC”) 805-10-55 other facts and circumstances should be considered in identifying the acquirer in a business combination, as discussed below.
a. Relative Voting Rights in the Combined Entity.    In a business combination, the acquirer usually is the combining entity whose owners as a group retain or receive the largest portion of the voting rights in the combined entity. Upon consummation of the Merger, holders of DropCar capital stock as well as certain DropCar advisors, Alpha and Palladium, are expected to own shares of WPCS common stock representing approximately 85% of the fully diluted shares of WPCS common stock and the WPCS stockholders will own approximately 15% of the fully diluted shares of WPCS common stock. The weight of this factor generally increases as the portion of the voting rights held by the majority becomes more significant ( e.g. , split of 75% and 25% may be more determinative than a split of 51% and 49%). WPCS and DropCar believe this factor is determinative since the split is 85/15.
b. Minority Voting Interests in the Combined Entity.    The acquirer usually is the combining entity whose single owner (or organized group of owners) holds the largest minority voting interest in the combined entity, if no other owner (or organized group of owners) has a significant voting interest. Certain DropCar stockholders who in the aggregate own 52.3% of the outstanding shares of DropCar common stock on an as-converted to common stock basis, will remain the largest stockholders of the combined company overall, owning in the aggregate approximately 57.3% of the fully diluted shares of WPCS common stock at the completion of the Merger. The shares held by WPCS stockholders after the Merger will be widely held and no one party will have a more significant ownership share in the combined entity than certain DropCar stockholders. The small minority interest held by WPCS strongly supports the determination that the DropCar is the accounting acquirer in the Merger.
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c. Composition of the Governing Body of the Combined Entity.    The acquirer usually is the combining entity whose owners have the ability to elect or appoint or to remove a majority of the members of the governing body of the combined entity. Following the consummation of the Merger, the WPCS Board will include a total of eight directors. Pursuant to the terms of the Merger Agreement, six of such directors will be designated by DropCar and two of such directors will be designated by WPCS. Therefore, a significant shift in the composition of the WPCS Board is likely to occur as a result of the Merger. WPCS and DropCar believe the existence of a change in board control supports the determination that the DropCar is the accounting acquirer in the Merger.
d. Senior Management Team of the Combined Entity.    The acquirer usually is the combining entity whose former management dominates the management of the combined entity. It is anticipated that the executive officers of WPCS upon closing will be David Newman, Chief Business Development Officer, Spencer Richardson, Chief Executive Officer, Daniel Gelbtuch, Vice President Corporate Finance Communications, and Leandro Larroulet, Chief Information Officer. In addition, as discussed above, the WPCS Board immediately prior to completion of the Merger will change as a result of the Merger. WPCS and DropCar believe this strongly supports the determination that DropCar is the accounting acquirer in the Merger.
e. Terms of the Exchange of Equity Interests.    The acquirer usually is the combining entity that pays a premium over the precombination fair value of the equity interests of the other combining entity. WPCS is acquiring DropCar, which is not a public company. As such, WPCS and DropCar believe the transaction price reflects the fair value for DropCar and could not reliably estimate a premium. WPCS and DropCar believe this factor is not determinative considering DropCar is a private entity.
WPCS and DropCar also considered other factors in ASC 805-10-55-13 – ASC 805-10-55-15:

Relative size.    The acquirer usually is the combining entity whose relative size is significantly larger than that of the other combining entity. WPCS and DropCar based their assessment on the financial information for the year ended April 30, 2017 as compared to DropCar’s December 31, 2016 and the three months ended March 31, 2017 financial information. WPCS’s historical revenues and assets exceeded DropCar’s historical revenues and assets and WPCS’s net income (loss) exceeded DropCar’s net loss. WPCS and DropCar believe this factor would be determinative that WPCS is the accounting acquirer in the Merger.

Identification of acquirer between two entities.    The identification of the acquirer should consider which entity initiated the business combination, the relative size of the combining entities, and any other pertinent information. In connection with the Merger, WPCS formed a new, wholly owned transitory merger subsidiary, Merger Sub, to effect the merger transaction between WPCS and DropCar, with DropCar surviving the Merger and becoming a wholly owned subsidiary of WPCS. Thus, the business combination effectively involved only two entities, WPCS and DropCar. Nonetheless, WPCS notes that the Merger resulted from WPCS conducting a formal process to evaluate its strategic alternatives, and that DropCar and its financial advisor initiated the combination with WPCS, which is consistent with the determination that DropCar is the accounting acquirer in the Merger.

A new entity used to effect the transaction.    A new entity formed to effect a business combination is not necessarily the acquirer. One of the existing combining entities should be determined to be the acquirer in a business combination involving the issuance of equity interests by a newly formed entity (Newco). As noted above, WPCS formed Merger Sub to effect the Merger and at the closing DropCar will merge with and into Merger Sub and survive the Merger as a wholly owned subsidiary of WPCS. Merger Sub was not created to issue equity interests to effect the business combination or to transfer cash or other assets or incur liabilities in the Merger. As a result, Merger Sub would not be considered to be the accounting acquirer in the Merger.
After considering all pertinent facts, reviewing the criteria outlined in ASC 805 and conducting the relevant analysis, WPCS and DropCar have concluded that DropCar is the accounting acquirer in the Merger. This conclusion is based primarily upon the following facts: (1) DropCar shareholders and advisors will remain the largest stockholders of the combined company, owning approximately 85% of the fully
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diluted shares of the combined company’s common stock upon the completion of the Merger, (2) there will be an immediate change in the composition of the combined company’s board of directors after the Merger whereby DropCar will control six of the eight seats, (3) DropCar’s senior management prior to the Merger will continue to be the senior management of the combined business after the Merger and (4) WPCS is issuing its equity interests as consideration for the Merger.
Appraisal Rights and Dissenters’ Rights (see page ___)
Holders of WPCS common stock are not entitled to appraisal rights in connection with the Merger. Holders of DropCar common stock are entitled to appraisal rights in connection with the Merger under the DGCL. For more information about such rights, see the provisions of Section 262 of the DGCL attached hereto as Annex F , and the section titled “ The Merger — Appraisal Rights and Dissenters’ Rights ” in this proxy statement/prospectus/information statement.
Comparison of Stockholder Rights (see page ___)
Both WPCS and DropCar are incorporated under the laws of the State of Delaware and, accordingly, the rights of the stockholders of each are currently, and will continue to be, governed by the DGCL. If the Merger is completed, DropCar stockholders will become stockholders of WPCS, and their rights will be governed by the DGCL, the WPCS amended and restated bylaws (the “WPCS Bylaws”) and the WPCS Charter, and as may be amended by WPCS Proposal Nos. 2 and 3 if approved by WPCS stockholders at the Special Meeting. The rights of WPCS stockholders contained in the WPCS Charter and WPCS Bylaws differ from the rights of DropCar stockholders under the DropCar amended and restated certificate of incorporation, as amended (the “DropCar Certificate of Incorporation”) and bylaws (the “DropCar Bylaws”), as more fully described under the section titled “ Comparison of Rights of Holders of WPCS Capital Stock and DropCar Capital Stock ” in this proxy statement/prospectus/information statement.
Risk Factors (see page __)
Both WPCS and DropCar are subject to various risks associated with their businesses and their industries. In addition, the Merger, including the possibility that the Merger may not be completed, poses a number of risks to each company and its respective stockholders, including the following risks:

The Exchange Ratio is not adjustable based on the market price of WPCS common stock so the Merger consideration at the closing may have a greater or lesser value than at the time the Merger Agreement was signed.

WPCS Net Cash may be less than $419,000 at the closing of the Merger, which would result in WPCS stockholders owning a smaller percentage of the combined organization and could even result in the termination of the Merger Agreement.

Failure to complete the Merger may result in WPCS or DropCar paying a termination fee to the other party and could harm the market price of WPCS common stock and future business and operations of each company.

If the conditions to the Merger are not met, the Merger may not occur.

The Merger may be completed even though material adverse changes may result from the announcement of the Merger, industry-wide changes and other causes.

WPCS stockholders may not realize a benefit from the Merger commensurate with the ownership dilution they will experience in connection with the Merger.

During the pendency of the Merger, WPCS and DropCar may not be able to enter into a business combination with another party at a favorable price because of restrictions in the Merger Agreement, which could adversely affect their respective businesses.

Certain provisions of the Merger Agreement may discourage third parties from submitting competing proposals, including proposals that may be superior to the arrangements contemplated by the Merger Agreement.
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Because the lack of a public market for DropCar’s capital stock makes it difficult to evaluate the fairness of the Merger, the stockholders of DropCar may receive consideration in the Merger that is less than the fair market value of DropCar’s capital stock and/or WPCS may pay more than the fair market value of DropCar’s capital stock.

Each of WPCS (before and after the Merger) and DropCar will incur substantial transaction-related costs relating to the Merger.

WPCS’s ability to use net operating loss and tax credit carryforwards and certain built-in losses to reduce future tax payments is limited by provisions of the Code, and may be subject to further limitation because of prior or future offerings of WPCS’s stock or other transactions.

WPCS will incur significant increased costs as a result of the completion of the Merger.

The Merger may fail to qualify as a reorganization for U.S. federal income tax purposes, resulting in recognition of taxable gain or loss by DropCar stockholders in respect of their DropCar capital stock.

The market price of WPCS common stock following the Merger may decline as a result of the Merger.

The price of WPCS common stock may be volatile and fluctuate substantially, which could result in substantial losses for WPCS stockholders.

WPCS’ failure to meet the continued listing requirements of The NASDAQ Capital Market after the Merger could result in a delisting of its common stock.

An active trading market for WPCS common stock may not develop.

WPCS has a substantial number of shares of authorized but unissued capital stock, and if it issues additional shares of capital stock in the future, existing shareholders will be diluted.

Future sales of WPCS common stock, or the perception that future sales may occur, may cause the market price of its common stock to decline, even if its business is doing well.
These risks and other risks are discussed in greater detail under the section titled “ Risk Factors ” in this proxy statement/prospectus/information statement. WPCS and DropCar both encourage you to read and consider all these risks carefully.
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SELECTED HISTORICAL AND UNAUDITED PRO FORMA
COMBINED FINANCIAL INFORMATION AND DATA
The following tables present summary historical financial data for WPCS and DropCar, summary unaudited pro forma condensed combined financial data for WPCS and DropCar and comparative historical and unaudited pro forma per share data for WPCS and DropCar.
Selected Historical Consolidated Financial Data of WPCS
The selected consolidated statements of operations data for the years ended April 30, 2013 through 2017 and the selected consolidated balance sheet data as of April 30, 2013 through 2017 are derived from WPCS’ audited consolidated financial statements included elsewhere in this proxy statement/prospectus/​information statement or in WPCS’ periodic filings with the SEC. The selected statements of operations data for the three months ended July 31, 2017 and 2016 and the selected balance sheet data as of July 31, 2017 and 2016 are derived from WPCS’ unaudited interim financial statements included elsewhere in this proxy statement/prospectus/information statement. WPCS’ unaudited interim financial statements have been prepared in accordance with U.S. GAAP on the same basis as its audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal, recurring adjustments, necessary for the fair presentation of those unaudited interim consolidated financial statements. WPCS’ historical results are not necessarily indicative of the results that may be expected in any future period and the results for the three months ended July 31, 2017 are not necessarily indicative of results to be expected for the full year ending April 30, 2018 or any other period.
The selected historical consolidated financial data below should be read in conjunction with the sections titled “ WPCS Management’s Discussion and Analysis of Financial Condition and Results of Operations ,” “ Risk Factors — Risks Related to WPCS ” and WPCS’ consolidated financial statements and related notes included elsewhere in this proxy statement/prospectus/information statement.
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Selected Historical Financial Data of WPCS
Years Ended April 30,
Three Months Ended July 31,
2017
2016
2015
2014
2013
2017
2016
(Unaudited)
Statement of Operations Data:
Revenue
$ 16,736,991 $ 14,555,102 $ 24,417,686 $ 15,751,092 $ 24,774,876 $ 3,523,347 $ 3,416,453
Costs and expenses:
Cost of revenue
12,893,901 11,570,364 20,559,427 12,725,037 17,556,832 2,754,550 2,635,508
Selling, general and administrative expenses
6,272,138 6,951,637 4,867,056 5,072,566 6,574,237 1,184,501 1,352,986
Severance expense
1,775,732
Depreciation and amortization
115,454 64,738 60,207 110,058 916,449 30,073 20,666
19,281,493 18,586,739 25,486,690 19,683,393 25,047,518 3,969,124 4,009,160
Operating loss
(2,544,502 ) (4,031,637 ) (1,069,004 ) (3,932,301 ) (272,642 ) (445,777 ) (592,707 )
Other income (expense):
Interest expense
(6,621 ) (3,196 ) (2,838,739 ) (4,795,178 ) (2,091,771 ) (2,051 ) (1,981 )
Change in fair value of derivative liabilities
(833,750 ) (2,703,248 )
Loss on extinguishment of
notes
(1,299,304 )
Inducement expense
(5,492,842 )
Income from section 16 settlement
400,000 1,401,516
Gain on forgiveness of other payable
to Zurich
883,757
Income from arbitrage settlement
1,192,246 7,750 1,150,000
Other income (expenses)
143,178 5,284 187,209 4,487
Income (loss) from continuing operations before income tax provision
(1,215,699 ) (3,629,549 ) (6,928,103 ) (10,860,533 ) (5,067,661 ) (440,078 ) 559,799
Income tax provision
3,130 1,706 69,679 (297,843 ) 216,314 2,618
Income (loss) from continuing operations
(1,218,829 ) (3,631,255 ) (6,997,782 ) (10,562,690 ) (5,283,975 ) (440,078 ) 557,181
Discontinued operations:
Income (loss) from discontinued operations
27,261 (2,550,113 ) (380,516 ) (3,287,932 )
Gain (loss) from disposal
837,720 798,896 (104,446 ) 1,756,586
Gain from disposal of BTX
19,700
Loss from disposal of Seattle
Operations
(374,932 )
Loss from discontinued operations, net of tax
864,981 (2,106,449 ) (484,962 ) (1,531,346 )
Consolidated net income (loss)
(1,218,829 ) (2,766,274 ) (9,104,231 ) (11,047,652 ) (6,815,321 ) (440,078 ) 557,181
Net income attributable to noncontrolling interest
16,505 (284,210 ) 11,287 95,406
Net income (loss) attributable to
WPCS
(1,218,829 ) (2,782,779 ) (8,820,021 ) (11,058,939 ) (6,910,727 ) (440,078 ) 557,181
Dividends declared on preferred
stock
(4,742,768 ) (2,508,518 ) (109,027 )
Deemed dividend on convertible preferred stock, due to beneficial conversion feature
(1,037,365 ) (744,499 )
Net income (loss) attributable to
WPCS common shareholders
$ (2,256,194 ) $ (8,270,046 ) $ (11,328,539 ) $ (11,167,966 ) $ (6,910,727 ) $ (440,078 ) $ 557,181
Basic:
Income (loss) from continuing operations
$ (0.41 ) $ (1.59 ) $ (10.40 ) $ (41.51 ) $ (116.93 ) $ (0.13 ) $ 0.21
Income (loss) from discontinued operations
(3.37 ) (1.54 ) (74.87 )
Gain (loss) from disposal
0.37 0.66 (0.41 ) 38.87
Income (loss) per common share attributable to WPCS
(0.41 ) (1.22 ) (13.11 ) (43.46 ) (152.92 ) (0.13 ) 0.21
Dividends declared on preferred
stock
(2.07 ) (3.73 ) (0.43 )
Deemed dividend on convertible preferred stock, due to beneficial conversion feature
(0.35 ) (0.33 )
Income (loss) per common share attributable to WPCS common shareholders
$ (0.76 ) $ (3.61 ) $ (16.84 ) $ (43.89 ) $ (152.92 ) $ (0.13 ) $ 0.21
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Years Ended April 30,
Three Months Ended July 31,
2017
2016
2015
2014
2013
2017
2016
(Unaudited)
Diluted:
Income (loss) from continuing operations
$ (0.41 ) $ (1.59 ) $ (10.40 ) $ (41.51 ) $ (116.92 ) $ (0.13 ) $ 0.14
Income (loss) from discontinued operations
(3.37 ) (1.54 ) $ (74.87 )
Gain (loss) from disposal
0.37 0.66 (0.41 ) $ 38.87
Income (loss) per common share attributable to WPCS
(0.41 ) (1.22 ) (13.11 ) (43.46 ) (152.92 ) (0.13 ) 0.14
Dividends declared on preferred
stock
(2.07 ) (3.73 ) (0.43 )
Deemed dividend on convertible preferred stock, due to beneficial conversion feature
(0.35 ) (0.32 )
Income (loss) per common share attributable to WPCS common shareholders
$ (0.76 ) $ (3.61 ) $ (16.84 ) $ (43.89 ) $ (152.92 ) $ (0.13 ) $ 0.14
Weighted average shares outstanding – basic
2,967,984 2,290,050 672,723 254,446 45,190 3,352,159 2,701,404
Weighted average shares outstanding – diluted
2,967,984 2,290,050 672,723 254,446 45,190 3,352,159 3,937,628
At April 30,
At July 31,
2017
2017
2016
2015
2014
2013
(Unaudited)
Balance Sheet Data:
Cash and cash equivalents
$ 1,659,318 $ 2,235,597 $ 2,364,360 $ 2,177,070 $ 1,410,223 $ 1,880,549
Accounts receivable, net of allowance
$ 4,199,674 $ 2,886,154 $ 6,494,890 $ 4,615,753 $ 4,139,768 $ 4,002,248
Total assets
$ 7,145,106 $ 5,804,179 $ 15,157,193 $ 22,021,726 $ 18,144,966 $ 7,076,911
Total liabilities
$ 4,073,558 $ 3,578,875 $ 15,296,257 $ 16,054,376 $ 19,072,394 $ 4,445,441
Convertible preferred stock
$ 1,144,678 $ 1,105,586 $ 5,120,697 $ 2,438,000 $ $ 1,144,678
Common stock
$ 335 $ 269 $ 98 $ 63 $ 99 $ 335
Additional paid-in capital
$ 89,003,669 $ 85,940,389 $ 70,380,397 $ 66,673,434 $ 50,844,183 $ 89,003,669
Accumulated deficit
$ (87,077,134 ) $ (84,820,940 ) $ (76,550,894 ) $ (65,222,355 ) $ (54,054,389 ) $ (87,517,212 )
Accumulated other comprehensive income on foreign currency translation
$ $ $ 349,723 $ 1,232,003 $ 1,433,541 $
Non-controlling interest
$ $ $ 560,915 $ 846,205 $ 849,138 $
Total stockholders’ equity
$ 3,071,548 $ 2,225,304 $ (139,064 ) $ 5,967,350 $ (927,428 ) $ 2,631,470
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Selected Historical Financial Data of DropCar
The selected statements of operations data for the year ended December 31, 2016 and the selected balance sheet data as of December 31, 2016 are derived from DropCar’s audited financial statements included elsewhere in this proxy statement/prospectus/information statement. The selected statements of operations data for the nine months ended September 30, 2017 and the selected balance sheet data as of September  30, 2017 are derived from DropCar’s unaudited interim financial statements included elsewhere in this proxy statement/prospectus/information statement. DropCar’s unaudited interim financial statements have been prepared in accordance with U.S. GAAP on the same basis as its audited annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal, recurring adjustments, necessary for the fair presentation of those unaudited interim financial statements. DropCar’s historical results are not necessarily indicative of the results that may be expected in any future period and the results for the nine months ended September  30, 2017 are not necessarily indicative of results to be expected for the full year ending December 31, 2017 or any other period.
The selected historical financial data below should be read in conjunction with the sections titled “ DropCar Management’s Discussion and Analysis of Financial Condition and Results of Operations ,” “ Risk Factors — Risks Related to DropCar’s Financial Condition and Capital Requirements ” and DropCar’s financial statements and related notes included elsewhere in this proxy statement/prospectus/information statement.
Selected Historical Financial Data of DropCar
For the
Year Ended
December 31,
2016
For the
Nine Months
Ended September  30,
2017
(in thousands, except per share data)
Net Service Revenue
$ 1,702 $ 2,797
Cost of Services
1,229 2,490
Selling, general and administrative expenses
1,764 4,550
Depreciation and amortization
79 136
Loss from operations
(1,370 ) (4,379 )
Interest (expense) income, net
(47 ) (709 )
Net loss
(1,417 ) (5,088 )
As of
December 31,
2016
As of
September 30,
2017
(in thousands)
Cash and cash equivalents
$ 51 $ 45
Working capital deficit, net
$ (367 ) $ (3,318 )
Total assets
$ 582 $ 899
Accumulated deficit
$ (1,964 ) $ (7,053 )
Total stockholders’ (deficit) equity
$ 83 $ (2,680 )
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Selected Unaudited Pro Forma Condensed Combined Financial Data of WPCS and DropCar
The following information does not give effect to the Reverse Stock Split.
The following selected unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting under U.S. GAAP, and gives effect to the Merger, which will be accounted for as a reverse acquisition, with DropCar being deemed the acquiring company for accounting purposes. The selected unaudited pro forma condensed combined financial statements are based on the historical financial statements of WPCS and DropCar’s historical financial statements as adjusted to give effect to DropCar’s acquisition of WPCS. The selected unaudited pro forma condensed combined statements of operations data for the nine months ended September 30, 2017 and the year ended December 31, 2016 give effect to these transactions as if they had occurred on January 1, 2016. The unaudited pro forma condensed combined balance sheet data as of September 30, 2017 gives effect to these transactions as if they had occurred on September 30, 2017.
The selected unaudited pro forma condensed combined financial data are presented for illustrative purposes only and are not necessarily indicative of the combined financial position or results of operations of future periods or the results that actually would have been realized had the entities been a single entity during these periods. The selected unaudited pro forma condensed combined financial data as of and for the nine months ended September 30, 2017 and for the year ended December 31, 2016 are derived from the unaudited pro forma condensed combined financial information and should be read in conjunction with that information. For more information, please see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” in this proxy statement/prospectus/information statement.
The unaudited pro forma condensed combined financial information assumes that, at the Effective Time, each share of DropCar capital stock will be converted into the right to receive shares of WPCS common stock such that, immediately after the Merger, WPCS securityholders are expected to own approximately 15% of the voting interests of the combined company immediately following the closing of the transaction and DropCar securityholders, including investors who participate in the Merger Financing, and certain DropCar advisors are expected to own approximately 85% of the voting interests of the combined company immediately following the closing of the transaction, and is subject to adjustment to account for the occurrence of certain events discussed elsewhere in this proxy statement/prospectus/​information statement.
Unaudited Pro Forma Condensed Combined Statements of Operations Data
For the
Year Ended
December 31,
2016
For the
Nine Months
Ended September  30,
2017
(in thousands, except per share data)
Revenue
$ 17,493 $ 14,793
Cost of revenue
13,408 11,684
Selling, general and administrative expenses
8,173 9,086
Depreciation and amortization
675 607
Operating loss
(4,763 ) (6,584 )
Other income (expense)
1,267 33
Loss before income taxes
(3,496 ) (6,551 )
Income tax
(4 )
Net loss
(3,500 ) (6,551 )
Dividends declared on preferred stock
(373 )
Deemed dividend on convertible preferred stock, due to beneficial conversion feature
(537 ) (1,017 )
Net loss attributable to WPCS common shareholders
$ (4,410 ) $ (7,568 )
Net loss per share
$ (0.13 ) $ (0.22 )
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Unaudited Pro Forma Condensed Combined Balance Sheet Data
As of
September  30,
2017
(in thousands)
Cash and cash equivalents
$ 5,926
Working capital, net
$ 4,120
Total assets
$ 23,555
Accumulated deficit
$ (10,674 )
Total stockholders’ equity
$ 16,533
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Comparative Historical and Unaudited Pro Forma Per Share Data
The information below reflects the historical net loss and book value per share of WPCS common stock and the historical net loss and book value per share of DropCar common stock in comparison with the unaudited pro forma net loss and book value per share after giving effect to the Merger of WPCS with DropCar on a pro forma basis.
You should read the tables below in conjunction with the audited and unaudited consolidated financial statements of WPCS included in this proxy statement/prospectus/information statement and the audited and unaudited consolidated financial statements of DropCar included in this proxy statement/prospectus/​information statement and the related notes and the unaudited pro forma condensed combined financial information and notes related to such financial statements included elsewhere in this proxy statement/​prospectus/information statement.
Comparative Historical and Unaudited Pro Forma Per Share Data
DropCar and WPCS
For the
Year Ended
December 31,
2016
For the
Nine Months
Ended September  30,
2017
Pro Forma Per Common Share Data:
Basic and diluted net loss per share
$ (0.13 ) $ (0.22 )
Book value per share
N/A $ 0.48
WPCS
For the
Year Ended
December 31,
2016
For the
Nine Months
Ended September  30,
2017
Historical Per Common Share Data:
Basic and diluted net loss per share
$ (0.90 ) $ (0.87 )
Book value per share
$ 0.70 $ 0.79
DropCar
For the
Year Ended
December 31,
2016
For the
Nine Months
Ended September  30,
2017
Historical Per Common Share Data:
Basic and diluted net loss per share
$ (0.28 ) $ (0.76 )
Book value per share
$ 0.02 $ (0.27 )
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MARKET PRICE AND DIVIDEND INFORMATION
WPCS common stock is currently listed on The NASDAQ Capital Market under the symbol “WPCS”. The following table presents, for the periods indicated, the range of high and low per share sales prices for WPCS common stock as reported on The NASDAQ Capital Market for each of the periods set forth below. These per share sales prices have not been adjusted to give effect to the Reverse Stock Split. DropCar is a private company and its common stock is not publicly traded.
WPCS Common Stock
Fiscal Year Ending April 30,
High
Low
2018:
Third Quarter (through November 17, 2017)
$ 1.77 $ 1.55
Second Quarter
$ 3.38 $ 1.18
First Quarter
$ 1.52 $ 1.21
2017:
Fourth Quarter
$ 1.58 $ 1.21
Third Quarter
$ 1.58 $ 1.18
Second Quarter
$ 1.67 $ 1.21
First Quarter
$ 1.65 $ 1.22
2016:
Fourth Quarter
$ 1.39 $ 0.97
Third Quarter
$ 1.92 $ 1.19
Second Quarter
$ 1.50 $ 1.07
First Quarter
$ 3.07 $ 1.32
The closing price of WPCS common stock on September 5, 2017, the last trading day prior to the public announcement of the Merger, was $1.24 per share and the closing price of WPCS common stock on _________ __, 2017 was $________ per share, in each case as reported on The NASDAQ Capital Market.
Because the market price of WPCS common stock is subject to fluctuation, the market value of the shares of WPCS common stock that DropCar stockholders will be entitled to receive in the Merger may increase or decrease.
Assuming approval of WPCS Proposal No. 3 and successful application for initial listing with The NASDAQ Capital Market, following the completion of the Merger, WPCS common stock will be listed on The NASDAQ Capital Market and will trade under WPCS’ new name, “DropCar, Inc.” and new trading symbol, “DCAR.”
As of __________ __, 2017 WPCS had ___ holders of record of its common stock. For detailed information regarding the beneficial ownership of some WPCS stockholders and DropCar stockholders, see the section titled “ Principal Stockholders of WPCS ” beginning on page ____ and the section titled “ Principal Stockholders of DropCar ” beginning on page ____ of this proxy statement/prospectus/​information statement.
Dividends
WPCS has never paid or declared any cash dividends on its common stock and does not anticipate paying cash dividends on its common stock for the foreseeable future. Notwithstanding the foregoing, any determination to pay cash dividends subsequent to the Merger will be at the discretion of the WPCS Board (as constituted at that time) and will depend upon a number of factors, including its results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors deemed relevant by the WPCS Board.
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DropCar has never paid or declared any cash dividends on its common or preferred stock. If the Merger does not occur, DropCar does not anticipate paying any cash dividends on its common or preferred stock in the foreseeable future, and DropCar intends to retain all available funds and any future earnings to fund the development and expansion of its business. Any future determination to pay dividends will be at the discretion of DropCar’s Board and will depend upon a number of factors, including its results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors the DropCar Board (as constituted at that time) deems relevant.
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RISK FACTORS
The combined company will be faced with a market environment that cannot be predicted and that involves significant risks, many of which will be beyond its control. In addition to the other information contained in this proxy statement/prospectus/information statement, you should carefully consider the material risks described below before deciding how to vote your shares of stock. In addition, you should read and consider the risks associated with the business of WPCS because these risks may also affect the combined company — these risks can be found in WPCS’ Annual Report on Form 10-K, as updated by subsequent Quarterly Reports on Form 10-Q, all of which are filed with the SEC. You should also read and consider the other information in this proxy statement/prospectus/information statement. Please see the section titled “Where You Can Find More Information” in this proxy statement/prospectus/information statement.
RISKS RELATED TO THE MERGER
The Exchange Ratio is not adjustable based on the market price of WPCS common stock so the Merger consideration at the closing may have a greater or lesser value than at the time the Merger Agreement was signed.
It is currently anticipated that, at the closing of the Merger, the Exchange Ratio will be approximately 1.666 shares of WPCS common stock for each share of DropCar common stock. This Exchange Ratio is merely an estimate based on the existing capitalization of the companies and certain assumptions regarding the satisfaction of various conditions to closing, including the assumption that WPCS Net Cash (as defined in the Merger Agreement) will be $419,000, that the Merger Financing will be sufficient to enable WPCS to qualify for a new listing on The NASDAQ Capital Market simultaneously with the Merger and (iii) the number of shares of WPCS common stock issuable to DropCar’s advisors in connection with the Merger will be 7,461,944. We cannot assure you that all or any of these assumptions are correct. If any of these assumptions are not correct at the time of the Merger, the Exchange Ratio may change either to WPCS’ benefit or to DropCar’s benefit. The actual Exchange Ratio will be determined immediately prior to the Merger and will be based on the actual facts that are relevant for determining the Exchange Ratio. Changes in the market price of WPCS common stock before the completion of the Merger will not affect the number of shares DropCar securityholders will be entitled to receive pursuant to the Merger Agreement. Therefore, if before the completion of the Merger, the market price of WPCS common stock declines from the market price on the date of the Merger Agreement, then DropCar securityholders could receive Merger consideration with substantially lower value. Similarly, if before the completion of the Merger, the market price of WPCS common stock increases from the market price on the date of the Merger Agreement, then DropCar securityholders could receive Merger consideration with substantially more value for their shares of DropCar capital stock than the parties had negotiated for in the establishment of the Exchange Ratio. However, DropCar does have a price-based termination right if DropCar is unable to complete the Merger Financing due to a decrease in the market price of WPCS common stock.
If WPCS Net Cash is less than $419,000 at the closing of the Merger, WPCS stockholders will own a smaller percentage of WPCS post-merger and could even result in the termination of the Merger Agreement.
For purposes of the Merger Agreement, WPCS Net Cash is subject to certain reductions, including, without limitation, accounts payable, accrued expenses (except those related to the Merger), current liabilities payable in cash, unpaid expenses related to the Merger and certain other unpaid obligations. In the event the WPCS Net Cash is less than $419,000, WPCS stockholders could hold a significantly smaller portion of the combined organization. Additionally, the Merger Agreement includes a termination right based upon a minimum net cash threshold of  $419,000. In the event that WPCS Net Cash falls below this threshold, then DropCar will have the right to terminate the Merger Agreement.
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Failure to complete the Merger may result in WPCS or DropCar paying a termination fee to the other party and could harm the market price of WPCS common stock and future business and operations of each company.
If the Merger is not completed, WPCS and DropCar are subject to the following risks:

if the Merger Agreement is terminated under specified circumstances, the party at fault may be required to pay the other party a termination fee of  $250,000 or reimburse the other party for up to $125,000 of transactions costs incurred by such other party;

the price of WPCS common stock may decline and remain volatile;

costs related to the Merger, such as legal and accounting fees, which WPCS and DropCar estimate will total approximately $        and $       , respectively, which must be paid even if the Merger is not completed; and

WPCS may be forced to cease its operations, dissolve and liquidate its assets.
In addition, if the Merger Agreement is terminated and the WPCS Board or the DropCar Board determines to seek another business combination, there can be no assurance that either WPCS or DropCar will be able to find a partner willing to provide equivalent or more attractive consideration than the consideration to be provided by each party in the Merger.
If the conditions to the Merger are not met, the Merger may not occur.
Even if the Merger is approved by the stockholders of both WPCS and DropCar, specified conditions must be satisfied or waived to complete the Merger. These conditions are set forth in the Merger Agreement and described in the section titled “ The Merger Agreement — Conditions to the Completion of the Merger ” in this proxy statement/prospectus/information statement. Neither WPCS nor DropCar can assure you that all the conditions will be satisfied or waived. If the conditions are not satisfied or waived, the Merger may not occur or may be delayed, and WPCS and DropCar each may lose some or all the intended benefits of the Merger.
The Merger may be completed even though material adverse changes may result from the announcement of the Merger, industry-wide changes and other causes.
In general, either WPCS or DropCar can refuse to complete the Merger if there is a material adverse change affecting the other party between September 6, 2017, the date of the Merger Agreement, and the closing of the Merger. However, certain types of changes do not permit either party to refuse to complete the Merger, even if such change could be said to have a material adverse effect on WPCS or DropCar, including:

any effect, change, event, circumstance or development in the conditions generally affecting the industries in which DropCar and WPCS operate or the U.S. or global economy or capital markets as a whole;

any natural disaster or any acts of terrorism, sabotage, military action or war or any escalation of worsening thereof;

any change in accounting requirements or principles or any change in applicable laws, rules or regulations or the interpretation thereof; and

any effect resulting from the announcement or pendency of the Merger or any related transactions.
If adverse changes occur and WPCS and DropCar still complete the Merger, the stock price of the combined company may suffer. This in turn may reduce the value of the Merger to the stockholders of WPCS, DropCar or both.
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WPCS stockholders may not realize a benefit from the Merger commensurate with the ownership dilution they will experience in connection with the Merger.
If the combined organization is unable to realize the full strategic and financial benefits currently anticipated from the Merger, WPCS stockholders will have experienced substantial dilution of their ownership interests without receiving any commensurate benefit, or only receiving part of the commensurate benefit to the extent the combined organization is able to realize only part of the strategic and financial benefits currently anticipated from the Merger.
During the pendency of the Merger, WPCS and DropCar may not be able to enter into a business combination with another party at a favorable price because of restrictions in the Merger Agreement, which could adversely affect their respective businesses.
Covenants in the Merger Agreement impede the ability of WPCS and DropCar to make acquisitions, subject to specified exceptions for WPCS relating to fiduciary duties, or complete other transactions that are not in the ordinary course of business, pending completion of the Merger. As a result, if the Merger is not completed, the parties may be at a relative disadvantage to their competitors during that period. In addition, while the Merger Agreement is in effect, each party is generally prohibited from soliciting, initiating, encouraging or entering into specified extraordinary transactions, such as a merger, sale of assets or other business combination, with any third party, subject to specified exceptions. Any such transactions could be favorable to such party’s stockholders.
Certain provisions of the Merger Agreement may discourage third parties from submitting competing proposals, including proposals that may be superior to the arrangements contemplated by the Merger Agreement.
The terms of the Merger Agreement prohibit each of WPCS and DropCar from soliciting competing proposals or cooperating with persons making unsolicited takeover proposals, except in limited circumstances if the WPCS Board determines in good faith, after consultation with its independent financial advisor, if any, and outside counsel, that an unsolicited competing proposal constitutes, or would reasonably be expected to result in, a superior competing proposal and that failure to take such action would be reasonably likely to result in a breach of the fiduciary duties of the WPCS Board. In addition, if WPCS or DropCar terminate the Merger Agreement under specified circumstances, including, in the case of WPCS, terminating because of a decision of the WPCS Board to recommend a superior competing proposal, WPCS or DropCar would be required to pay a termination fee of  $250,000 or up to $125,000 in expense reimbursements to the other party, as described under “ The Merger Agreement — Termination of the Merger Agreement and Termination Fee. ” This termination fee may discourage third parties from submitting competing proposals to WPCS or its stockholders, and may cause the WPCS Board to be less inclined to recommend a competing proposal.
Because the lack of a public market for DropCar’s capital stock makes it difficult to evaluate the fairness of the Merger, the stockholders of DropCar may receive consideration in the Merger that is less than the fair market value of DropCar’s capital stock and/or WPCS may pay more than the fair market value of DropCar’s capital stock.
The outstanding capital stock of DropCar is privately held and is not traded in any public market. The lack of a public market makes it extremely difficult to determine the fair market value of DropCar’s capital stock. Because the percentage of WPCS equity to be issued to DropCar stockholders was determined based on negotiations between the parties, it is possible that the value of the WPCS common stock to be received by DropCar stockholders will be less than the fair market value of DropCar’s capital stock, or WPCS may pay more than the aggregate fair market value for DropCar’s capital stock.
Each of WPCS, DropCar and the combined company will incur substantial transaction-related costs relating to the Merger.
WPCS and DropCar have incurred, and expect to continue to incur, significant non-recurring transaction-related costs associated with completing the Merger and combining the two companies. These fees and costs have been, and will continue to be, substantial. Through          , 2017, WPCS and DropCar together have incurred $       in expenses related to completing the Merger and they estimate
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they will incur additional Merger related expenses of  $       before consummation of the Merger. Non-recurring transaction costs include, but are not limited to, fees paid to legal, financial and accounting advisors, severance and benefit costs, filing fees and printing costs. Additional unanticipated costs may be incurred in the integration of the operations of WPCS and DropCar, which may be higher than expected and could have a material adverse effect on the combined company’s financial condition and operating results.
WPCS’s ability to use net operating loss and tax credit carryforwards and certain built-in losses to reduce future tax payments is limited by provisions of the Internal Revenue Code, and may be subject to further limitation because of prior or future offerings of WPCS’s stock or other transactions.
Sections 382 and 383 of the Code, contain rules that limit the ability of a company that undergoes an ownership change, which is generally an increase in the ownership percentage of certain stockholders in the stock of a company by more than 50% over a three-year period, to utilize its net operating loss and tax credit carryforwards and certain built-in losses recognized in years after the ownership change. These rules generally operate by focusing on ownership changes involving stockholders owning directly or indirectly 5% or more of the stock of a company and any change in ownership arising from a new issuance of stock by the company. Generally, if an ownership change, as defined by Section 382 of the Code, occurs, the yearly taxable income limitation on the use of net operating loss and tax credit carryforwards and certain built-in losses is equal to the product of the applicable long-term tax-exempt rate and the value of the company’s stock immediately before the ownership change. The Merger will result in such an ownership change. As a result, WPCS will not be able to use its pre-Merger losses or credit carryovers or certain built-in losses to offset future taxable income in excess of the annual limitations imposed by Sections 382 and 383 of the Code, which may result in the expiration of a portion of WPCS’ tax attributes before utilization.
WPCS will incur significant increased costs as a result of the completion of the Merger.
Following completion of the Merger, WPCS’s operating expenses are likely to increase significantly as DropCar continues to develop and grow its business. These increases are most likely to be in the areas of sales and marketing, compensation and product development. There also may be increases in legal, accounting, insurance and compliance costs. As a result, the combined company is expected to report operating losses until DropCar can significantly increase its revenues. This may have a material adverse impact on the market price of WPCS common stock following the Merger.
The Merger may fail to qualify as a reorganization for U.S. federal income tax purposes, resulting in recognition of taxable gain or loss by DropCar stockholders in respect of their DropCar capital stock.
WPCS and DropCar intend for the Merger to qualify as a reorganization within the meaning of Section 368(a) of the Code, as described in the section entitled “ The Merger — Material U.S. Federal Income Tax Consequences of the Merger ” in this proxy statement/prospectus/information statement. In the event that the Merger does not qualify as a reorganization, the Merger would result in taxable gain or loss for each DropCar stockholder, with the amount of such gain or loss determined by the amount that each DropCar stockholder’s adjusted tax basis in the DropCar capital stock surrendered is less or more than the fair market value of the WPCS common stock and any cash in lieu of a fractional share received in exchange therefor. Each holder of DropCar capital stock is urged to consult with his, her or its own tax advisor with respect to the tax consequences of the Merger.
RISKS RELATED TO OWNERSHIP OF WPCS COMMON STOCK FOLLOWING THE MERGER
The combined company may need to raise additional capital after the Merger, which could cause significant dilution to the combined company’s stockholders, restrict the combined company’s operations or require the combined company to relinquish proprietary rights.
WPCS may be required to raise additional funds after the Merger. Such additional financing may not be available to the combined company when it needs it or may not be available on favorable terms. To the extent that the combined company raises additional capital by issuing equity securities, the terms of such an issuance may be on worse commercial terms than the Merger Financing and may cause more significant dilution to the combined company’s stockholders’ and the terms of any new equity securities may have
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preferences over the combined company’s common stock. Any debt financing by the combined company may involve covenants that restrict its operations. These restrictive covenants may include limitations on additional borrowing and specific restrictions on the use of the combined company’s assets, as well as prohibitions on its ability to create liens, pay dividends, redeem its stock or make investments. In addition, if the combined company raises additional funds through other arrangements, it may be necessary to relinquish potentially valuable rights or grant licenses on terms that are not favorable to the combined company.
Some WPCS and DropCar executive officers and directors have interests in the Merger that are different from those of other stockholders and that may influence them to support or approve the Merger without regard to the interests of the other stockholders.
Some officers and directors of WPCS and DropCar participate in arrangements that provide them with interests in the Merger that are different from yours, including, among others, the continued service as an officer or director of the combined company, change-in-control payments, severance benefits, payment of deferred and current year incentive compensation, continued indemnification and the potential ability to sell an increased number of shares of common stock of the combined company in accordance with Rule 144 under the Securities Act. For more information regarding the interests of the WPCS and DropCar executive officers and directors in the Merger, see the sections titled “ The Merger — Interests of the WPCS Directors and Executive Officers in the Merger ” and “ The Merger — Interests of DropCar Directors and Executive Officers in the Merger ” of this proxy statement/prospectus/information statement.
The market price of WPCS common stock following the Merger may decline as a result of the Merger.
The market price of WPCS common stock may decline after the Merger for various reasons, including if:

investors react negatively to the prospects of the combined company’s business and prospects from the Merger;

the effect of the Merger on the combined company’s business and prospects is not consistent with the expectations of financial or industry analysts; or

the combined company does not achieve the perceived benefits of the Merger as rapidly or to the extent anticipated by financial or industry analysts.
Following the completion of the Merger, DropCar and WPCS securityholders will have a reduced ownership and voting interest in, and will exercise less influence over the management of, the combined company as compared to their current ownership and voting interest in their respective companies.
After the completion of the Merger, the current stockholders of DropCar and WPCS will own a smaller percentage of the combined company than their ownership of their respective companies prior to the Merger. As currently contemplated, immediately after the Merger, DropCar securityholders and the DropCar advisors in connection with the Merger, Alpha and Palladium, will own approximately 85% of the issued and outstanding shares of WPCS common stock and WPCS stockholders will own approximately 15% of the issued and outstanding shares of WPCS common stock. These percentages give effect to (i) the conversion of all shares of WPCS convertible preferred stock into shares of WPCS common stock, (ii) the dilutive effect of outstanding options (but not warrants) to purchase shares of WPCS common stock outstanding on September 6, 2017 ( i.e. , the date of Merger Agreement) and (iii) the issuances of the shares of WPCS common stock covered by WPCS Merger Warrants. It does not take into account any shares of WPCS common stock underlying WPCS Warrants outstanding on the date of the Merger (2,039,734 shares as of November 15, 2017). In addition, these percentages assume (i) that the Merger Financing will be sufficient to allow WPCS to qualify for listing on The NASDAQ Capital Market immediately after the Merger, (ii) that at the time of the Merger, WPCS will have exactly $419,000 of Net Cash and (iii) the number of shares of WPCS common stock issuable to DropCar’s advisors in connection with the Merger, Alpha and Palladium, will be 7,461,944. If the Merger Financing is not sufficient to allow WPCS to qualify for listing on The NASDAQ Capital Market (and an additional financing is required), WPCS has Net Cash at the time of the Merger that is greater than or less than $419,000 and/or the number of shares of WPCS common stock issuable to DropCar’s advisors in connection with the Merger will be less than 7,461,944, the
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equity allocation ratios as well as the Exchange Ratio will be revised based on the facts existing at that time. Regardless of what those percentages will be, securityholders of DropCar and WPCS will have less influence over the management and policies of the combined company than they currently exercise over the management and policies of their respective companies.
The price of WPCS common stock may be volatile and fluctuate substantially, which could result in substantial losses for WPCS stockholders.
The market price of shares of WPCS common stock has fluctuated in the past and is likely to be volatile in the future as well. Between May 1, 2016, the first day of WPCS’ most recently completed fiscal year, and          , 2017, the trading range of shares of WPCS common stock has been between $1.18 to $     . The stock market in general and the market for smaller companies, like WPCS in particular, have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, WPCS stockholders may not be able to sell their common stock at or above the price they paid for it. The market price for WPCS’s common stock may be influenced by many factors, including:

announcements related to the Merger or other significant corporate transactions;

issuances of new equity securities pursuant to a future offering, including issuances of preferred stock;

the success of competitive products, services or technologies;

regulatory or legal developments in the United States and other countries;

developments or disputes concerning patent applications, issued patents or other proprietary rights;

the recruitment or departure of key personnel;

actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;

variations in WPCS’s financial results or those of companies that are perceived to be similar to WPCS;

market conditions in the market segments in which WPCS operates;

variations in quarterly and annual operating results;

announcements of new products and/or services by WPCS or its competitors;

the gain or loss of significant customers;

changes in analysts’ earnings estimates;

short selling of shares of WPCS common stock;

litigation;

changing the exchange or quotation system on which shares of WPCS common stock are listed;

acquisitions or other significant transactions;

general economic, industry and market conditions; and

the other factors described in this “Risk Factors” section.
Companies that have experienced volatility in the market price of their stock have frequently been the objects of securities class action litigation. Class action and derivative lawsuits could result in substantial costs to us and cause a diversion of our management’s attention and resources, which could materially harm our financial condition and results of operations.
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Provisions in the WPCS Charter and under Delaware law could make an acquisition of WPCS, which may be beneficial to its stockholders, more difficult and may prevent attempts by its stockholders to replace or remove its current management.
Provisions in the WPCS Charter and the WPCS Bylaws may discourage, delay or prevent a merger, acquisition or other change in control of WPCS that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of WPCS common stock, thereby depressing the market price of WPCS common stock. In addition, because the WPCS Board is responsible for appointing the members of its management team, these provisions may frustrate or prevent any attempts by WPCS stockholders to replace or remove its current management by making it more difficult for stockholders to replace members of the WPCS Board. Among other things, these provisions state that:

the authorized number of directors can be changed only by resolution of the WPCS Board;

The WPCS bylaws may be amended or repealed by the WPCS Board or by WPCS stockholders;

stockholders may not call special meetings of the stockholders or fill vacancies on the WPCS Board;

The WPCS Board will be authorized to issue, without stockholder approval, preferred stock, the rights of which will be determined at the discretion of the board of directors and that, if issued, could operate as a “poison pill” to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that the WPCS Board does not approve;

WPCS stockholders do not have cumulative voting rights, and therefore stockholders holding a majority of the shares of WPCS common stock outstanding are able to elect all of its directors; and

WPCS stockholders must comply with advance notice provisions to bring business before or nominate directors for election at a stockholder meeting.
Moreover, because WPCS is incorporated in Delaware, WPCS is governed by the provisions of Section 203 of the DGCL, which prohibits a person who owns in excess of 15% of WPCS’ outstanding voting stock from merging or combining with WPCS for a period of three years after the date of the transaction in which the person acquired in excess of 15% of WPCS outstanding voting stock, unless the merger or combination is approved in a prescribed manner.
A failure by WPCS to comply with the initial listing standards of The NASDAQ Capital Market may subject its stock to delisting from The NASDAQ Capital Market, which listing is a condition to the completion of the Merger.
WPCS common stock is currently listed for trading on The NASDAQ Capital Market. WPCS has filed an initial listing application for the combined company pursuant to NASDAQ’s “reverse merger” rules, which requires that WPCS meets the initial listing requirements to maintain the listing and continued trading of its shares on The NASDAQ Capital Market after the Merger. These initial listing requirements are more difficult to achieve than the continued listing requirements under which WPCS is now trading. Based on information currently available to WPCS, WPCS believes that it will not be able to meet the $4.00 minimum bid price initial listing requirement at the closing of the Merger unless it effects a reverse stock split. If WPCS is unable to satisfy these requirements, NASDAQ may notify WPCS that its stock will be delisted from The NASDAQ Capital Market. It is a condition to DropCar’s obligation to complete the Merger that WPCS maintain the listing of its common stock on NASDAQ. In addition, oftentimes a reverse stock split will not result in a trading price for the affected common stock that is proportional to the ratio of the split. WPCS believes that a reverse stock split will be in the best interest of the combined company and its stockholders and, accordingly, asks for its shareholders to approve the Reverse Stock Split as set forth elsewhere in this proxy statement/prospectus/information statement. However, WPCS cannot assure you that the implementation of the Reverse Stock Split will have a positive impact on the price of its common stock.
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WPCS’ failure to meet the continued listing requirements of The NASDAQ Capital Market could result in a delisting of its common stock.
The continued listing standards of NASDAQ provide, among other things, that a company may be delisted if the bid price of its stock drops below $1.00 for a period of 30 consecutive business days or if stockholders’ equity is less than $2.5 million. Over the last three years, WPCS has received four notices from the Listing Qualifications Staff of NASDAQ that it failed to satisfy one of the continued listing requirements for continued listing requirement on The Nasdaq Capital Market and that, unless remedial action was timely taken our common stock would be delisted. The first notice, dated November 3, 2014, advised that WPCS failed to meet the minimum stock price requirement set forth in NASDAQ Listing Rule 5550(a)(2) because for the previous 30 consecutive business days, the bid price for its common stock had closed below $1.00 per share. On April 10, 2015, WPCS effected a 1 for 22 reverse-split to remedy this deficiency and regained compliance. On each of December 29, 2014, June 1, 2015 and December 12, 2016, WPCS was notified that it did not meet the minimum stockholders’ equity requirement for continued listing set forth in Listing Rule 5550(b)(1). In each instance, WPCS resolved the issue by issuing and selling equity securities — specifically, its Series H Preferred Stock, Series H-1 Shares, Series H-2 Shares and Series H-3 Shares.
While WPCS has exercised diligent efforts to maintain the listing of its common stock on NASDAQ, there can be no assurance that it will be able to meet the continuing listing requirements of The NASDAQ Capital Market. If that were to occur, NASDAQ may take steps to delist the WPCS common stock. Such a delisting would likely have a negative effect on the price of WPCS common stock and would impair your ability to sell or purchase WPCS common stock when you wish to do so. In the event of a delisting, WPCS would take actions to restore its compliance with NASDAQ’s listing requirements, but WPCS can provide no assurance that any such action taken by WPCS would allow its common stock to become listed again, stabilize the market price or improve the liquidity of its common stock, prevent WPCS common stock from dropping below the NASDAQ minimum bid price requirement again or prevent future non-compliance with NASDAQ’s listing requirements. Further, if WPCS were to be delisted from The NASDAQ Capital Market, its common stock would cease to be recognized as covered securities and WPCS would be subject to regulation in each state in which WPCS offers its securities.
Delisting from NASDAQ could adversely affect WPCS’ ability to raise additional financing through the public or private sale of equity securities, would significantly affect the ability of investors to trade its securities and would negatively affect the value and liquidity of WPCS common stock. Delisting could also have other negative results, including the potential loss of confidence by employees, the loss of institutional investor interest and fewer business development opportunities.
If WPCS common stock becomes subject to the penny stock rules, it may be more difficult to sell those shares.
The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). The inter-dealer quotation system maintained by OTC Markets, Inc., including OTCQX, OTCQB and OTC Pink, do not meet such requirements and if the price of WPCS common stock remains less than $5.00 and WPCS is no longer listed on a national securities exchange, its common stock may be deemed a penny stock. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information. In addition, the penny stock rules require that prior to effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive: (i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for WPCS common stock, and therefore stockholders may have difficulty selling their shares.
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An active trading market for WPCS common stock may not develop.
The listing of WPCS common stock on The NASDAQ Capital Market does not assure that a meaningful, consistent and liquid trading market exists. Although WPCS common stock is listed on The NASDAQ Capital Market, trading volume in its common stock has been limited and an active trading market for shares WPCS common stock may never develop or be sustained. If an active market for WPCS common stock does not develop, it may be difficult for investors to sell their shares without depressing the market price for the shares or at all.
Reports published by securities or industry analysts, including projections in those reports that exceed WPCS’ actual results, could adversely affect its common stock price and trading volume.
Securities research analysts may establish and publish their own periodic projections for WPCS’ business. These projections may vary widely from one another and may not accurately predict the results WPCS achieves. WPCS’ stock price may decline if its actual results do not match securities research analysts’ projections. Similarly, if one or more of the analysts who writes reports on WPCS downgrades its stock or publishes inaccurate or unfavorable research about its business, WPCS’ stock price could decline. If one or more of these analysts ceases coverage of WPCS or fails to publish reports on WPCS regularly, WPCS’ stock price or trading volume could decline. While WPCS expects securities research analyst coverage, if no securities or industry analysts begin to cover WPCS, the trading price for its stock and the trading volume could be adversely affected.
WPCS has a substantial number of shares of authorized but unissued capital stock, and if it issues additional shares of capital stock in the future, existing shareholders will be diluted.
The WPCS Charter authorizes the issuance of up to 100,000,000 shares of common stock and up to 5,000,000 shares of preferred stock with the rights, preferences and privileges determined by the WPCS Board from time to time. Based on the capitalization of WPCS and DropCar as of November 15, 2017, WPCS estimates that upon the consummation of the Merger (i) approximately 35,358,000 shares of WPCS common stock and approximately ___ shares of WPCS convertible preferred stock will be actually issued and outstanding and (ii) approximately 17,115,000 shares of WPCS common stock will be reserved for future issuance as follows:

10,109,000 shares for issuance upon exercise of stock options granted under the Plan (of which 3,225,760 shares would be issuable upon exercise of currently outstanding options);

526,300 shares for issuance upon conversion of the outstanding shares of WPCS convertible preferred stock;

4,440,000 shares for issuance upon exercise of the WPCS Merger Warrants; and

2,040,000 shares for issuance upon exercise of the outstanding WPCS Warrants.
Thus, upon completion of the Merger, approximately 47,527,000 shares of WPCS common stock and ____ shares of WPCS preferred stock will be available for future issuance. Shares of WPCS capital stock could be used for a variety of purposes including raising capital to fund growth or operations, for acquisitions, for strategic alliances, to attract and retain key employees, for anti-takeover purposes or to delay or prevent changes in control to our management or other transactions and corporate purposes that the WPCS Board deems appropriate. In most cases, the WPCS may have the authority to authorize issuances of WPCS capital stock without getting advance approval from WPCS stockholders. Any future issuances of shares of capital stock WPCS may not be made on favorable terms or at all, they may not enhance stockholder value, may have rights, preferences and privileges that are superior to those of the WPCS common stock and may have an adverse impact on its business or the trading price of the shares of WPCS common stock. Additionally, any such issuances will reduce the proportionate ownership and voting power of existing stockholders.
Future sales of WPCS common stock, or the perception that future sales may occur, may cause the market price of its common stock to decline, even if its business is doing well.
Sales of substantial amounts of WPCS common stock in the public market, or the perception that these sales may occur, could materially and adversely affect the price of its common stock and could impair
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its ability to raise capital through the sale of additional equity securities. WPCS maintains several shelf registration statements on Form S-3 with the SEC pursuant to which the holders of its Series H-1, Series H-2 and Series H-3 convertible preferred stock and the warrants issued in connection with those securities may resell the shares of WPCS common stock into which the preferred stock is convertible and which is issuable upon the exercise of those warrants. Collectively, those registration statements cover the potential resale of up to 4,762,660 shares of WPCS common stock of which 1,773,128 shares of WPCS common stock were sold through November 15, 2017.
Because WPCS does not anticipate paying any cash dividends on its capital stock in the foreseeable future, capital appreciation, if any, will be your sole source of gain.
WPCS does not anticipate paying future dividends on its capital stock. WPCS currently intends to retain all its future earnings, as applicable, to finance the growth and development of its business. In addition, the terms of any future debt agreements may preclude WPCS from paying dividends. As a result, capital appreciation, if any, of WPCS common stock will be the sole source of gain for the foreseeable future.
RISKS RELATING TO THE WPCS BUSINESS
WPCS is not currently profitable and may never become profitable.
WPCS has a history of losses and expect to incur continuing losses and negative operating cash flow for the foreseeable future. As such, WPCS may never achieve or maintain profitability. For the years ended April 30, 2017 and 2016, WPCS incurred losses from continuing operations of approximately $1.2 million and approximately $3.6 million, respectively, and comprehensive loss attributable to WPCS stockholders for those years were approximately $1.2 million and approximately $2.8 million, respectively. After taking into account discontinued operations, net loss attributable WPCS common stockholders was approximately $2.26 million for the fiscal year ended April 30, 2017 and approximately $8.27 million for the fiscal year ended April 30, 2016. In addition, WPCS cumulative deficit at April 30, 2017 was approximately $87.1 million. While WPCS also expects to experience negative cash flow for the foreseeable future as a result of such losses, it has adequate cash to fund its operating losses and capital expenditures over the next 12 months. However, to achieve and maintain profitability, WPCS must generate additional significant sources of revenues and control its operating expenses, neither of which are certain to occur. WPCS’ failure to achieve or maintain profitability could negatively impact the value of its securities.
The Suisun City Operations line of credit contains various covenants which, if not complied with, could accelerate repayment obligations, thereby materially and adversely affecting WPCS liquidity, financial conditions and results of operations. The is no assurance that the line of credit will survive the Merger.
WPCS has a $1.0 million line of credit with First Northern Bank that it can use to finance its Suisun City Operations (the “Credit Line”). Currently, there is no outstanding balance under the Credit Line. The Credit Line was first obtained in 2015 and has been renewed annually. The most recent renewal was on August 15, 2017. WPCS recently received a default notice from First Northern Bank stating that WPCS failed to comply with the net worth requirement (a minimum of  $2.2 million) or the asset ratio requirement (1.2:1) covenants contained in the loan agreement, which was subsequently cured. WPCS cannot assure you that it will remain in compliance with the covenants throughout the term of the facility. If WPCS is unable to remain in compliance it will not have access to this Credit Facility which could adversely impact its liquidity.
WPCS may be unable to successfully implement its Organic Growth Initiatives, including into new geographic markets and market segments, and manage our growth.
WPCS defines “Organic Growth Initiatives” as its efforts to increase revenues by: (i) expanding in existing markets, by offering, among other things, new products and services, building a direct sales force, and forming strategic alliances; (ii) opening new markets without any existing operations, otherwise known as “greenfielding”; and (iii) entering into new markets via acquisition and then subsequently growing such businesses through various methods other than further acquisition.
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As such, WPCS’ long-term growth strategy depends, in part, in addition to possible strategic acquisitions, on the Organic Growth Initiatives, including the expansion of its operations into new geographic markets and market segments. WPCS’ ability to effectively implement Organic Growth Initiatives depends, among other things, on its ability to identify and successfully enter and market its services in new geographic markets and market segments, its ability to recruit and retain qualified personnel, its ability to coordinate its efforts across various geographic markets and market segments, its ability to maintain and grow relationships with its existing customers and expand its customer base, its ability to offer new products and services, its ability to form strategic alliances and partnerships, its ability to secure key vendor and/or distributor relationships, and the availability of sufficient capital. In connection with expanding its operations into new geographic markets, WPCS may be unable to replicate the Suisun City Operations, in other markets, based solely upon greenfielding.
While continuing to weigh all available strategic options, WPCS decided, based upon the prior experience of key members of its operational management team in the Texas market, to launch a greenfielding effort in Texas. As such, WPCS began operations in San Antonio, Texas in January 2016 and then commenced operations in Dallas, Texas in April 2016. During the period from May 1, 2016 through January 31, 2017, the Texas operations generated approximately $881,000 in revenue, while incurring approximately $1,799,000 in cost of revenue and selling, general and administrative expenses in starting these two offices. During November 2016, WPCS instituted some changes and cost reductions in the Texas operations staffing and related expenses to better align our operational costs with short-term projected revenue expectations. WPCS initially anticipated expending approximately $750,000 to develop these markets and the Texas operations took longer than anticipated to begin generating the expected level of revenue to warrant continued operation. Therefore, in late December 2016, WPCS decided to close the Texas operations and at the end of February 2017 the San Antonio and Dallas offices were closed. If WPCS is unable to successfully implement its Organic Growth Initiatives its long-term growth and ability to achieve profitability may be adversely impacted.
Acquisitions involve risks that could result in adverse changes to operating results, cash flows and liquidity.
WPCS has made and, in the future, may continue to make, strategic acquisitions. However, WPCS may not be able to identify suitable acquisition opportunities, or may be unable to obtain the consent of our stockholders and therefore, may not be able to complete such acquisitions. WPCS may pay for acquisitions with its common stock or with convertible securities, which may dilute your investment in its common stock, or it may decide to pursue acquisitions that investors may not agree with. In connection with most of our acquisitions, WPCS also agreed to substantial earn-out arrangements. To the extent it defers the payment of the purchase price for any acquisition through a cash earn-out arrangement, it will reduce cash flows in subsequent periods. In addition, acquisitions may expose WPCS to operational challenges and risks, including:

the ability to profitably manage acquired businesses or successfully integrate the operations of acquired businesses, as well as the acquired business’ financial reporting and accounting control systems into its existing platforms;

increased indebtedness and contingent purchase price obligations associated with an acquisition;

the ability to fund cash flow shortages that may occur if anticipated revenue is not realized or is delayed, whether by general economic or market conditions, or unforeseen internal difficulties;

the availability of funding sufficient to meet increased capital needs;

diversion of management’s time and attention from existing operations; and

the ability to retain or hire qualified personnel required for expanded operations.
Completing acquisitions may require significant management time and financial resources because WPCS may need to assimilate widely dispersed operations with distinct corporate cultures. In addition, acquired companies may have liabilities that it failed, or were unable, to discover in the course of performing due diligence investigations. WPCS cannot assure you that the indemnification granted by sellers of acquired companies will be sufficient in amount, scope or duration to fully offset the possible liabilities associated with businesses or properties it assumes upon consummation of an acquisition. WPCS
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may learn additional information about its acquired businesses that could have a material adverse effect on WPCS, such as unknown or contingent liabilities and liabilities related to compliance with applicable laws. Any such liabilities, individually or in the aggregate, could have a material adverse effect on its business. Failure to successfully manage the operational challenges and risks associated with, or resulting from, acquisitions could adversely affect WPCS’ results of operations, cash flows and liquidity. Borrowings or issuances of convertible securities associated with these acquisitions may also result in higher levels of indebtedness, which could adversely impact WPCS’ ability to service its debt within the scheduled repayment terms.
Provisions pertaining to WPCS’ Series H-3 preferred stock may inhibit its ability to consummate a financing.
Pursuant to the Securities Purchase Agreement that WPCS executed in connection with the issuance and sale of shares of its Series H-3 preferred stock, WPCS agreed to not issue any shares of common stock, or securities convertible into or exercisable or exchangeable for common stock, except for certain permitted issuances, without the consent of the holders of a majority of the outstanding shares of the Series H-3 preferred stock for a period beginning on the closing date and ending on the earlier of  (i) December 31, 2017 ( i.e. , nine months after the closing date) or (ii) a Change in Control (as that term is defined in the Securities Purchase Agreement) occurs with respect to the company (the “Restricted Period”). In addition, certain of its officers and directors agreed not to exercise their company stock options during the Restricted Period, except in connection with a Change in Control of the company. WPCS cannot assure you that, due to unanticipated changes to its business or economic conditions in the markets in which it operate or in the economy at large, we will not require additional capital. These provisions may prevent WPCS from raising additional capital or, at least, make it more difficult or more expensive for WPCS to complete a financing. As the Merger constitutes a Change in Control as defined in the Securities Purchase Agreement, the Restricted Period would terminate upon the consummation of the Merger.
If WPCS fails to accurately estimate costs associated with its fixed-price contracts using percentage-of-completion, its actual results could vary from our assumptions, which may reduce its profitability or impair its financial performance.
A substantial portion of WPCS revenues is derived from fixed price contracts. Under these contracts, WPCS sets the price of its services on an aggregate basis and assumes the risk that the costs associated with its performance may be greater than anticipated. WPCS recognizes revenue and profit on these contracts as the work on these projects progresses on a percentage-of-completion basis. Under the percentage-of-completion method, contracts in process are valued at cost plus accrued profits less earned revenues and progress payments on uncompleted contracts.
The percentage-of-completion method therefore relies on estimates of total expected contract costs. These costs may be affected by a variety of factors, such as lower than anticipated productivity, conditions at work sites differing materially from what was anticipated at the time we bid on the contract and higher costs of materials and labor. Contract revenue and total cost estimates are reviewed and revised monthly as the work progresses, such that adjustments to profit resulting from revisions are made cumulative to the date of the revision. Adjustments are reflected in contract revenue for the fiscal period affected by these revised estimates. If estimates of costs to complete long-term contracts indicate a loss, we immediately recognize the full amount of the estimated loss. Such adjustments and accrued losses could result in reduced profitability and liquidity.
Failure to properly manage projects could result in unanticipated costs or claims.
WPCS project engagements may involve large scale, highly complex projects. The quality of WPCS’ performance on such projects depends in large part upon our ability to manage the relationship with its customers, and to effectively manage the project and deploy appropriate resources, including third-party contractors and its own personnel, in a timely manner. Any defects or errors or failure to meet customers’ expectations could result in claims for substantial damages against WPCS. WPCS’ contracts generally limit our liability for damages that arise from negligent acts, errors, mistakes or omissions in rendering services to its customers. However, WPCS cannot be certain that these contractual provisions will protect it from liability for damages in the event it is sued. In addition, in certain instances, WPCS guarantees customers
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that it will complete a project by a scheduled date or that the network will achieve certain performance standards. If the project or network experiences a performance problem, WPCS may not be able to recover the additional costs it would incur, which could exceed revenues realized from a project.
WPCS may be unable to obtain sufficient bonding capacity to undertake certain projects.
Some of WPCS’ contracts require performance and payment bonds. If WPCS is not able to renew or obtain a sufficient level of bonding capacity in the future, it may be precluded from being able to bid for certain contracts or successfully contract with certain customers. In addition, even if it were able to successfully renew or obtain performance or payment bonds, WPCS may be required to post letters of credit in connection with the bonds, which could negatively affect its cash flow.
Furthermore, under standard terms in the surety market, sureties issue or continue bonds on a project-by-project basis and can decline to issue bonds at any time or require the posting of additional collateral as a condition to issuing or renewing any bonds. If WPCS were to experience an interruption or reduction in the availability of bonding capacity as a result of these or any other reasons, WPCS may be unable to compete for or work on certain projects that would require bonding.
The ability of Suisun City Operations to obtain performance and payment bonds from traditional surety markets within the insurance industry has been adversely impacted by WPCS operating losses and negative working capital at the consolidated company level.
An economic downturn in any of the industries WPCS serves could lead to less demand for its services.
As a significant majority of WPCS’ revenue is derived from a few industries, a downturn in any of those industries could adversely affect its results of operations. Specifically, an economic downturn in any industry it serves could result in the delay, reduction or cancellation of projects by customers as well as cause customers to outsource less work, resulting in decreased demand for WPCS services and potentially impacting its operations and its ability to grow. A number of other factors, including financing conditions and potential bankruptcies in the industries served by WPCS or a prolonged economic downturn or recession, could adversely affect its customers and their ability or willingness to fund capital expenditures in the future. Consolidation, competition, capital constraints or negative economic conditions in the private sector, public services, healthcare energy industries and the K-12 education market may also result in reduced spending by, or the loss of, one or more of WPCS’ customers.
WPCS has a significant amount of accounts receivable and costs and estimated earnings in excess of billings assets.
WPCS performs services under contracts prior to billing customers for that work, thereby, in effect, extending credit to its customers. At April 30, 2017, WPCS had net accounts receivable of approximately $4.2 million and costs and estimated earnings in excess of billings of approximately $411,000. Periodically, WPCS assesses the credit risk of its customers and continuously monitors the timeliness of payments. Adverse changes in the markets served by WPCS, reducing WPCS’ cash flow and adversely impacting its liquidity and profitability. Additionally, it may also result in WPCS incurring losses in excess of its current bad debt allowances.
The industry in which WPCS operates has relatively low barriers to entry and increased competition could result in margin erosion, which could make profitability even more difficult to sustain.
Other than the technical skills required in WPCS’ business, the barriers to entry in its business are relatively low. WPCS does not have any intellectual property rights to protect its business methods. Ultimately, the success of WPCS’ business depends on the quality of its services, its ability to deliver these services efficiently and its relationships with its customers. Increased competition as a result of new entrants in our markets, may result in reduced operating margins and loss of market share and brand recognition.
WPCS’ business depends upon its ability to keep pace with the latest technological changes, and its failure to do so could make it less competitive.
The market for WPCS’ services is characterized by rapid change and technological improvements. Failure to respond in a timely and cost-effective way to these technological developments may have a
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material adverse impact on its business and operating results. WPCS derives, and expects it will continue to derive, a substantial portion of its revenues from design-build services that are based upon current technologies that, it believes, are capable of adapting to future technologies. As a result, its future success depends, in part, on its ability to develop and market service offerings that respond in a timely manner to the technological advances of our customers, evolving industry standards and changing customer preferences.
Amounts included in WPCS backlog may not result in actual revenue or translate into profits.
As of April 30, 2017, WPCS had a backlog of unfilled orders of approximately $14.6 million. This backlog amount is based on contract values and purchase orders and may not result in actual receipt of revenue in the originally anticipated period or at all. In addition, contracts included in our backlog may not be profitable. WPCS has experienced variances in the realization of its backlog because of project delays or cancellations resulting from external market factors and economic factors beyond its control and is likely to experience delays and/or cancellations in the future. If the backlog fails to materialize, WPCS could experience a further reduction in revenue, profitability and liquidity.
The loss of one or more key members of the WPCS management team could adversely affect our business.
Currently, WPCS has only one line of business — our Suisun City Operations, which is based in California and managed by a key employee. As such, its business and financial performance depends on the continued service and performance of this employee, who has extensive experience and specialized expertise in the installation and service of voice and data networks. WPCS does not have an employment agreement with this employee nor does it carry “key man” life insurance. WPCS cannot assure that it can continue to retain the services of the employee or that it can hire or train anyone to replace him, without having some effect on the operations, should his employment with us terminate. Thus, the loss of the employee’s services, whether by resignation, retirement, disability or death, could have a material adverse impact on WPCS’ business and operating results.
Employee strikes and other labor-related disruptions could adversely affect WPCS’ operations.
WPCS’ Suisun City Operations is labor intensive. As of April 30, 2017, approximately 78% of its workforce was unionized. The current union contract expires in November 2017. Strikes or labor disputes with its unionized employees may adversely affect WPCS ability to conduct its business profitably. If WPCS is unable to reach agreement with any of its unionized work groups on future negotiations regarding the terms of their collective bargaining agreements, or if additional segments of its workforce become unionized, WPCS may be subject to work interruptions or stoppages. Any of these events could be disruptive to WPCS operations and could result in negative publicity, loss of contracts and a decrease in revenues.
Historically, WPCS’ quarterly results have fluctuated significantly and are expected to continue to be volatile, which could adversely impact the trading price of the WPC common stock price.
WPCS’ quarterly operating results have fluctuated in the past and will likely fluctuate in the future. As a result, period-to-period comparisons of quarterly, and even annual, results of operations may not a good indication of our future performance. A number of factors, many of which are beyond our control, are likely to cause these fluctuations to continue. Some of these factors include:

the timing and size of design-build projects and technology upgrades by customers;

fluctuations in demand for outsourced contracting services;

the ability of certain customers to sustain capital resources to pay their trade account balances and required changes to WPCS’ allowance for doubtful accounts based on periodic assessments of the collectability of accounts receivable balances;

reductions in the prices of services offered by competitors;

WPCS’ success in bidding on and winning new business; and
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WPCS’ sales, marketing and administrative cost structure.
Because WPCS’ operating results may vary significantly from quarter to quarter, its operating results may not meet the expectations of securities analysts and investors, and the market price of the WPCS common stock could decline significantly, which may expose the company to risks of securities litigation, impair its ability to attract and retain qualified individuals using equity incentives and make it more difficult to complete acquisitions using equity as consideration.
WPCS’ future plans and growth are dependent on maintaining sufficient working capital.
WPCS’ future plans and growth depend on its ability to increase revenues and to continue its business development efforts surrounding its contract award backlog. If WPCS continues to incur losses and revenues do not generate from the backlog as expected, WPCS may need to raise additional capital to expand our business and continue as a going concern. WPCS currently anticipates that its current cash position will be sufficient to meet its working capital requirements to continue its sales and marketing efforts for at least 12 months. If, in the future, the company’s plans or assumptions change or prove to be inaccurate, WPCS may need to raise additional funds through public or private debt or equity offerings, financings, corporate collaborations, or other means. It may also be required to reduce operating expenditures or investments in infrastructure.
RISKS RELATED TO DROPCAR
DropCar has a history of losses and may be unable to achieve or sustain profitability.
DropCar has incurred net losses in each year since its inception and as of September 30, 2017, it had an accumulated deficit of  $7.1 million. Such losses are continuing to date. DropCar does not know if its business operations will become profitable or if it will continue to incur net losses in the future. DropCar’s management expects to incur significant expenses in the future in connection with the development and expansion of its business, which will make it difficult for DropCar to achieve and maintain future profitability. DropCar may incur significant losses in the future for a number of reasons, including the other risks described in this proxy statement/prospectus, and it may encounter unforeseen expenses, difficulties, complications, delays and other unknown events. Accordingly, there can be no certainty regarding if or when DropCar will achieve profitability, or if such profitability will be sustained.
Historical losses and negative cash flows from operations raise doubt about DropCar’s ability to continue as a going concern.
Historically, DropCar has suffered losses and has not generated positive cash flows from operations. This raises substantial doubt about DropCar’s ability to continue as a going concern. The audit report of EisnerAmper LLP for the year ended December 31, 2016 on DropCar’s financial statements contained an explanatory paragraph expressing doubt about DropCar’s ability to continue as a going concern.
DropCar has a limited operating history which makes it difficult to predict future growth and operating results.
DropCar has a relatively short operating history which makes it difficult to reliably predict future growth and operating results. DropCar faces all the risks commonly encountered by other businesses that lack an established operating history, including, without limitation, the need for additional capital and personnel and intense competition. There is no relevant history upon which to base any assumption as to the likelihood that its business will be successful.
DropCar will require substantial additional funding, which may not be available on acceptable terms, or at all.
DropCar has used substantial funds to develop its vehicle support platform (“VSP”) and will require substantial additional funds continue to develop its VSP and expand into new markets. DropCar expects that the capital resources available to it as of September 30, 2017, plus the anticipated proceeds from the Merger Financing, will be sufficient to meet its anticipated cash requirements for at least the next 12 months. DropCar’s future capital requirements and the period for which it expects its existing resources to support its operations may vary significantly from what DropCar expects. DropCar’s monthly spending levels vary based on new and ongoing technology developments and corporate activities. To date, DropCar
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has primarily financed its operations through sales of its securities. DropCar intends to seek additional funding in the future through equity or debt financings, credit or loan facilities or a combination of one or more of these financing sources. DropCar’s ability to raise additional funds will depend on financial, economic and other factors, many of which are beyond its control. Additional funds may not be available to DropCar on acceptable terms or at all.
If DropCar raises additional funds by issuing equity or convertible debt securities, its stockholders will suffer dilution and the terms of any financing may adversely affect the rights of its stockholders. In addition, as a condition to providing additional funds to DropCar, future investors may demand, and may be granted, rights superior to those of existing stockholders. Debt financing, if available, may involve restrictive covenants limiting DropCar’s flexibility in conducting future business activities, and, in the event of insolvency, debt holders would be repaid before holders of equity securities received any distribution of corporate assets.
If DropCar is unable to obtain funding on a timely basis or on acceptable terms, or at all, it may have to delay its plans for expansion, limit strategic opportunities or undergo reductions in its workforce or other corporate restructuring activities.
Because DropCar’s VSP operates in a relatively new market, it must actively seek market acceptance of its services, which it expects will occur gradually, if at all.
DropCar derives, and expects to continue to derive, a substantial portion of its revenue from its vehicle support platform, which is part of a relatively new and evolving market. DropCar’s services are substantially different from existing valet, parking, maintenance and car storage services and many potential clients may be reluctant to utilize its services until they have been tested in more established commercial operations over a significant period. As a result, DropCar may have difficulty achieving market acceptance for its platform. If the market for its services fails to grow or grows more slowly than it currently anticipates, DropCar’s business would be negatively affected. To date, DropCar primarily operates in the New York metropolitan area. DropCar has targeted expansion into markets it believes are most likely to adopt its platform. However, its efforts to expand within and beyond its current market may not achieve the same success, or rate of adoption, that it has achieved to date.
DropCar’s recent growth rate may not be sustainable, and future growth may place significant demands on its management and infrastructure.
DropCar has experienced strong growth in its business. This growth has placed and may continue to place significant demands on DropCar’s management and its operational and financial infrastructure, and DropCar may not be able to sustain these rates of growth in future periods. Many of DropCar’s systems and operational practices were implemented when DropCar was at a smaller scale of operations. In addition, as DropCar grows, DropCar must implement new systems and software to help run its operations and must hire additional personnel. As its operations grow in size, scope and complexity, DropCar will need to continue to improve and upgrade its systems and infrastructure to offer an increasing number of clients enhanced services, solutions and features. DropCar may choose to commit significant financial, operational and technical resources in advance of an expected increase in the volume of its business, with no assurance that the volume of business will increase. Continued growth could also strain DropCar’s ability to maintain reliable service levels for existing and new clients, which could adversely affect its reputation and business in the future. For example, in the past, DropCar has experienced, and may in the future experience, situations where the demand for its services exceeded its estimates and DropCar’s employee base was, and may in the future be, insufficient to support this higher demand. DropCar’s client experience and overall reputation could be harmed if it is unable to grow its employee base to support higher demand.
Competition for staffing, shortages of qualified drivers and union activity may increase DropCar’s labor costs and reduce profitability.
DropCar’s operations are conducted primarily with employee drivers. Recently, there has been intense competition for qualified drivers in the transportation industry due to a shortage of drivers. The availability of qualified drivers may be affected from time to time by changing workforce demographics, competition from other transportation companies and industries for employees, the availability and affordability of
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driver training schools, changing industry regulations, and the demand for drivers in the labor market. If the industry-wide shortage of qualified drivers continues, DropCar will likely have difficulty attracting and retaining enough qualified drivers to fully satisfy customer demands. Due to the current highly-competitive labor market for drivers, DropCar may be required to increase driver compensation and benefits in the future, or face difficulty meeting customer demands, all of which could adversely affect DropCar’s profitability.
If DropCar’s labor costs increase, it may not be able to raise rates to offset these increased costs. Union activity is another factor that may contribute to increased labor costs. DropCar currently does not have any union employees, and any increase in labor union activity could have a significant impact on its labor costs. DropCar’s failure to recruit and retain qualified drivers, or to control its labor costs, could have a material adverse effect on DropCar’s business, financial position, results of operations, and cash flows.
Deterioration in economic conditions in general could reduce the demand for DropCar’s services and damage its business and results of operations.
Adverse changes in global, national and local economic conditions could negatively impact DropCar’s business. DropCar’s business operations are concentrated and will likely continue to be concentrated in large urban areas, and business could be materially adversely affected to the extent that weak economic conditions result in the elimination of jobs and high unemployment in these large urban areas. If deteriorating economic conditions reduce discretionary spending, business travel or other economic activity that fuels demand for DropCar’s services, its earnings could be reduced. Adverse changes in local and national economic conditions could also depress prices for DropCar’s services or cause individual and/or corporate clients to cancel their agreements to purchase DropCar’s services. Moreover, mandated changes in local and/or national compensation as it relates to minimum wage, overtime, and other compensation regulations may have an adverse impact on DropCar’s profitability.
DropCar expects to face intense competition in the market for innovative valet and car storage services, and its business will suffer if it fails to compete effectively.
While DropCar believes that its platform offers a number of advantages over existing service providers, it expects that the competitive environment for its valet and storage services will become more intense as companies enter the market. In addition, there are relatively low barriers to entry into DropCar’s business. Currently, DropCar’s primary competitors are public transportation, traditional valet and car storage providers, car sharing services and traditional rental car companies that have recently begun offering more innovative services. Many of DropCar’s competitors have greater name recognition among DropCar’s target clients and greater financial, technical and/or marketing resources than DropCar has. DropCar’s competitors have resources that may enable them to respond more quickly to new or emerging technologies and changes in client preferences. These competitors could introduce new solutions with competitive prices or undertake more aggressive marketing campaigns than DropCar’s. Failure to compete effectively could have a material adverse impact on its results of operations.
DropCar’s long term sustainability relies on its ability to anticipate or keep pace with changes in the marketplace and the direction of technological innovation and customer demands.
The automotive industry, especially the vehicle support segment of the automotive industry in which DropCar operates, is subject to intense and increasing competition and rapidly evolving technologies. DropCar believes that the automotive industry will experience significant and continued change in the coming years. In addition to traditional competitors, DropCar must also be responsive to the entrance of non-traditional participants in the automotive industry. These non-traditional participants, such as ride-sharing companies and autonomous vehicles, may seek to disrupt the historic business model of the industry through the introduction of new technologies, new products or services, new business models or new methods of travel. To compete successfully, DropCar will need to demonstrate the advantages of its services over alternative solutions and services, as well as newer technologies. Failure to adapt to innovations in technology and service offerings in the automotive space could have a material adverse impact on DropCar’s ability to sustain its business and remain competitive.
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DropCar’s growth depends on its ability to gain sustained access to a sufficient number of parking locations on commercially reasonable terms that offer convenient access in reaching its clients.
DropCar currently operates in New York City and expects that future growth will focus on expansion into other large cities. It must therefore compete for limited parking locations. Many cities are densely populated and parking locations may not be available at locations that provide convenient access to DropCar’s clients or on terms that are commercially reasonable. If DropCar is unable to gain sustained access to a sufficient number of parking locations that are convenient to its clients, its ability to attract and retain clients will suffer. This challenge of finding adequate parking will grow if DropCar is able to successfully grow its subscriber base. If DropCar is unable to gain sustained access to a sufficient number of parking locations, or DropCar is unable to gain such access on commercially reasonable terms, this could have a material adverse impact on DropCar’s business, financial condition and results of operations.
If DropCar fails to successfully execute its growth strategy, its business and prospects may be materially and adversely affected.
To date, DropCar primarily operates in the New York metropolitan area. DropCar’s growth strategy includes expanding its services to new geographic locations, which may not succeed due to various factors, including one or more of the following: competition, its inability to build brand name recognition in these new markets, its inability to effectively market its services in these new markets or its inability to deliver high-quality services on a cost-effective and continuous and consistent basis. In addition, DropCar may be unable to identify new cities with sufficient growth potential to expand its network, and DropCar may fail to attract quality drivers and other employees and/or establish the necessary commercial relationships with local vendors that are required in order to deliver its services in these areas. If DropCar fails to successfully execute its growth strategy, DropCar may be unable to maintain and grow its business operation, and its business and prospects may be materially and adversely affected.
DropCar may experience difficulties demonstrating the value to customers of newer, higher priced and higher margin services if they believe existing services are adequate to meet end customer expectations.
As DropCar develops and introduces new services, DropCar faces the risk that customers may not value or be willing to purchase these higher priced and higher margin services due to pricing constraints. Owing to the extensive time and resources that DropCar invests in developing new services, if DropCar is unable to sell customers new services, its revenue could decline and its business, financial condition, operating results and cash flows could be negatively affected.
If efforts to build and maintain strong brand identity are not successful, DropCar may not be able to attract or retain clients, and its business and operating results may be adversely affected.
DropCar believes that building and maintaining its brand is critical to the success of its business. Consumer client and automotive awareness of the brand and its perceived value will depend largely on the success of marketing efforts and the ability to provide a consistent, high-quality client and business experience. Conversely, any failure to maximize marketing opportunities or to provide clients with high-quality valet, logistics, maintenance and storage experiences for any reason could substantially harm DropCar’s reputation and adversely affect its efforts to develop as a trusted brand. To promote its brand, DropCar has made and will continue to make substantial investments relating to advertising, marketing and other efforts, but cannot be sure that such investment will be successful.
Furthermore, as the primary point of contact with clients, DropCar relies on its drivers to provide clients and business partners with a high-quality client experience. The failure of DropCar’s drivers to provide clients and business partners with this trusted experience could cause customers and business partners to turn to alternative providers, including DropCar’s competitors. Any incident that erodes consumer affinity for DropCar’s brand, including a negative experience with one of DropCar’s valets or damage to a customer’s car could result in negative publicity, negative online reviews and damage DropCar’s business.
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DropCar relies on third-party service providers to provide parking garages for its clients’ cars. If these service providers experience operational difficulties or disruptions, DropCar’s business could be adversely affected.
DropCar depends on third-party service providers to provide parking garages for its clients’ cars. In particular, DropCar relies on local parking garage vendors to provide adequate convenient parking locations. DropCar does not control the operation of these providers. If these third-party service providers terminate their relationship with DropCar, decide to sell their facilities or do not provide convenient access to DropCar’s clients’ vehicles, it would be disruptive to DropCar’s business as DropCar is dependent on suitable parking locations within relative proximity of their clients’ residences and business locations. This disruption could harm DropCar’s reputation and brand and may cause DropCar to lose clients.
If DropCar is unsuccessful in establishing or maintaining its business-to-business (B2B) model, its revenue growth could be adversely affected.
DropCar currently depends on corporate clients and the B2B market for a significant portion of its revenue. The success of this strategy will depend on DropCar’s ability to maintain existing B2B partners, obtain new B2B partners, and generate a community of participating corporate clients sufficiently large to support such a model. DropCar may not be successful in establishing such partnerships on terms that are commercially favorable, if at all, and may encounter financial and logistical difficulties associated with sustaining such partnerships. If DropCar is unsuccessful in establishing or maintaining its B2B model, its revenue growth could be adversely affected.
DropCar faces risks related to liabilities resulting from the use of client vehicles by its employees.
DropCar’s business can expose it to claims for property damage, personal injury and death resulting from the operation and storage of client cars by its drivers. While operating client cars, drivers could become involved in motor vehicle accidents due to mechanical or manufacturing defects, or user error by the DropCar-employed driver or by a third-party driver that results in death or significant property damage for which DropCar may be liable.
In addition, DropCar depends on its drivers to inspect the vehicles prior to driving in order to identify any potential damage or safety concern with the vehicle. To the extent that DropCar is found at fault or otherwise responsible for an accident, its insurance coverage would only cover losses up to a maximum of $5 million, in certain instances, in the United States.
DropCar may experience difficulty obtaining coverage for certain insurable risks or obtaining such coverage at a reasonable cost.
DropCar maintains insurance for workers’ compensation, general liability, automobile liability, property damage and other insurable risks. DropCar is responsible for claims exceeding its retained limits under its insurance policies, and while DropCar endeavors to purchase insurance coverage corresponding to its assessment of risk, it cannot predict with certainty the frequency, nature or magnitude of claims or direct or consequential damages, and may become exposed to liability at levels in excess of its historical levels resulting from unusually high losses or otherwise. Additionally, consolidation of entities in the insurance industry could impact DropCar’s ability to obtain or renew policies at competitive rates, which could have a material adverse impact on DropCar’s business, as would the incurrence of uninsured claims or the inability or refusal of DropCar’s insurance carriers to pay otherwise insured claims. Any material change in DropCar’s insurance costs due to changes in frequency of claims, the severity of claims, the costs of premiums or for any other reason could have a material adverse effect on DropCar’s financial position, results of operations, or cash flows.
DropCar’s success depends on the continued reliability of the internet infrastructure.
DropCar’s services are designed primarily to work over the internet, and the success of its platform is largely dependent on the development and maintenance of the internet infrastructure, along with its clients’ access to low-cost, high-speed internet. The future delivery of its services will depend on third-party internet service providers to expand high-speed internet access, to maintain a reliable network with the necessary speed, data capacity and security, and to develop complementary products and services for
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providing reliable and timely internet access. Any outages or delays resulting from damage to the internet infrastructure, including problems caused by viruses, malware and similar programs, could reduce clients’ access to the internet and DropCar’s services and could adversely impact DropCar’s business.
System interruptions that impair access to DropCar’s website or mobile application could substantially harm its business and operating results.
The satisfactory performance, reliability and availability of DropCar’s website and mobile application, which enable clients to access its services, are critical to its business. Any systems interruption that prevents clients and visitors from accessing DropCar’s website and mobile app could result in negative publicity, damage to its reputation and brand and could cause its business and operating results to suffer. DropCar may experience system interruptions for a variety of reasons, including network failures, power outages, cyber-attacks, problems caused by viruses and similar programs, software errors or an overwhelming number of clients or visitors trying to reach its website during periods of strong demand. Because it is dependent in part on third parties for the implementation and maintenance of certain aspects of its systems and because some of the causes of system interruptions may be outside of its control, DropCar may not be able to remedy such interruptions in a timely manner, or at all. Any significant disruption to its website, mobile application or internal computer systems could result in a loss of clients and adversely affect DropCar’s business and results of operations.
If DropCar is unable to protect confidential client information, its reputation may be harmed and it may be exposed to liability and a loss of clients.
DropCar’s system stores, processes and transmits confidential client information, including location information and other sensitive data. It relies on encryption, authentication and other technologies to keep this information secure. DropCar may not have adequately assessed the internal and external risks posed to the security of its systems and may not have implemented adequate preventative safeguards. In the event that the security of its system is compromised in the future, DropCar may not take adequate reactionary measures. Any compromise of information security could expose DropCar’s confidential client information, damaging its reputation and exposing it to costly litigation and liability that could harm DropCar’s business and operating results.
DropCar may not be able to adequately protect its intellectual property rights or may be accused of infringing the intellectual property rights of third parties.
DropCar’s business depends substantially on its intellectual property rights, the protection of which is crucial to its business success. To protect its proprietary rights, DropCar relies or may in the future rely on a combination of trademark law and trade secret protection, copyright law and patent law. DropCar also utilizes contractual agreements, including, in certain circumstances, confidentiality agreements between the company and its employees, independent contractors and other advisors. These afford only limited protection, and unauthorized parties may attempt to copy aspects of DropCar’s website and mobile application features, software and functionality, or to obtain and use information that it considers proprietary or confidential, such as the technology used to operate its website, its content and company trademarks. DropCar may also encounter difficulties in connection with the acquisition and maintenance of domain names, and regulations governing domain names may not protect its trademarks and similar proprietary rights.
In addition, DropCar may become subject to third-party claims that it infringes the proprietary rights of others. Such claims, regardless of their merits, may result in the expenditure of significant financial and managerial resources, injunctions against DropCar or the payment of damages. DropCar may need to obtain licenses from third parties who allege that it has infringed their rights, but such licenses may not be available on terms acceptable to DropCar or at all.
Future legislation or regulations may adversely affect DropCar’s business and results of operations.
Although various jurisdictions and government agencies are considering implementing legislation in response to the rise of other ride- and car-sharing enterprises, such as Uber Technologies Inc., currently no such legislation exists that DropCar believes has jurisdiction over, or applicability to, its operations.
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DropCar does not believe it is subject to any material government regulations or oversight, but regulations impacting parking and traffic patterns in the areas of its operations could impact the services it provides. DropCar is also subject to various U.S. federal, state and local laws and regulations, including those related to environmental, health and safety, financial, tax, customs and other matters. DropCar cannot predict the substance or impact of pending or future legislation or regulations, or the application thereof. The introduction of new laws or regulations or changes in existing laws or regulations, or the interpretations thereof, could increase the costs of doing business for DropCar or its clients or otherwise restrict its actions and adversely affect its financial condition, results of operations and cash flows.
Seasonality may cause fluctuations in DropCar’s financial results.
DropCar generally experiences some effects of seasonality due to increases in travel during the summer months and holidays such as Thanksgiving and Christmas. Accordingly, the use of its services and associated revenue have generally increased at a higher rate during such periods. Its revenue also fluctuates due to inclement weather conditions, such as snow or rain storms. This seasonality may cause fluctuations in its financial results.
DropCar depends on key personnel to operate its business, and the loss of one or more members of its management team, or its failure to attract, integrate and retain other highly qualified personnel in the future, could harm its business.
DropCar believes its future success will depend in large part upon its ability to attract and retain highly skilled managerial, technical, finance and sales and marketing personnel. It currently depends on the continued services and performance of the key members of its management team, including Spencer Richardson, its Co-Founder and Chief Executive Officer, and David Newman, its Co-Founder and Chief Business Development Officer. The loss of any key personnel could disrupt its operations and have an adverse effect on its ability to grow the business.
To date, DropCar has relied on outside consultants and other service providers for the majority of its accounting and financial support. In connection with the Merger, DropCar intends to hire a Chief Financial Officer and plans to continue to expand existing personnel, including adding additional members to its management team. DropCar competes in the market for personnel against numerous companies, including larger, more established competitors who have significantly greater financial resources and may be in a better financial position to offer higher compensation packages to attract and retain human capital. DropCar cannot be certain that it will be successful in attracting and retaining the skilled personnel necessary to operate its business effectively in the future.
DropCar may become engaged in legal proceedings that could result in unforeseen expenses and could occupy a significant amount of management’s time and attention.
From time to time, DropCar may become subject to litigation, claims or other proceedings that could negatively affect its business operations and financial position. Litigation disputes could cause DropCar to incur unforeseen expenses, could occupy a significant amount of management’s time and attention and could negatively affect its business operations and financial position. See “ DropCar’s Business — Legal Proceedings .”
DropCar’s business is subject to interruptions, delays and failures resulting from natural or man-made disasters.
DropCar’s services, systems and operations are vulnerable to damage or interruption from earthquakes, volcanoes, fires, floods, power losses, telecommunications failures, terrorist attacks, acts of war, human errors, break-ins and similar events. A significant natural disaster could have a material adverse impact on its business, operating results and financial condition. DropCar may not have sufficient protection or recovery plans in certain circumstances and its insurance coverage may be insufficient to compensate for losses that may occur. As DropCar relies heavily on its servers, computer and communications systems and the internet to conduct its business and provide a high-quality client experience, such disruptions could negatively impact its ability to run the business, which could have an adverse effect on its operating results.
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DropCar will incur significant increased costs as a result of operating as a public company, and its management will be required to devote substantial time to public company compliance requirements.
DropCar will face increased legal, accounting, administrative and other costs and expenses as a public company that it did not incur as a private company. The Sarbanes-Oxley Act of 2002, including the requirements of Section 404, and rules and regulations subsequently implemented by the SEC, the Public Company Accounting Oversight Board, and the stock exchanges on which DropCar’s securities may be traded require public companies to meet certain corporate governance standards. A number of those requirements will require DropCar to carry out activities it has not done previously. For example, DropCar will adopt new internal controls and disclosure controls and procedures. Its management and other personnel will need to devote a substantial amount of time to these requirements. Moreover, these rules and regulations will increase DropCar’s legal and financial compliance costs and will make some activities more time-consuming and costly. These increased costs will require DropCar to divert a significant amount of money that it could otherwise use to expand its business and achieve its strategic objectives.
Failure to establish and maintain effective internal controls after the closing of the Merger in accordance with Sections 302 and 404 of the Sarbanes-Oxley Act could have an adverse effect on DropCar’s business and stock price.
Effective with the closing of the Merger, DropCar will be required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require management to certify financial and other information in DropCar’s quarterly and annual reports and provide an annual management report on the effectiveness of controls over financial reporting. Though DropCar will be required to disclose changes made in its internal controls and procedures on a quarterly basis, DropCar is not required to make its first annual assessment of its internal controls over financial reporting pursuant to Section 404 until the year following its first annual report required to be filed with the SEC.
To comply with the requirements of Sections 302 and 404, DropCar may need to undertake various actions, such as implementing new internal controls and procedures and hiring additional accounting or internal audit staff. Testing and maintaining internal controls can divert DropCar management’s attention from other matters that are important to the operation of its business. In addition, when evaluating its internal controls over financial reporting, DropCar may identify material weaknesses that it may not be able to remediate in time to meet the applicable deadline imposed upon it for compliance with the requirements of Sections 302 and 404. If DropCar identifies material weaknesses in its internal controls over financial reporting or is unable to comply with the requirements of Sections 302 and 404 in a timely manner or assert that its internal controls over financial reporting are effective, or if its independent registered public accounting firm is unable to express an opinion as to the effectiveness of its internal controls over financial reporting, investors may lose confidence in the accuracy and completeness of DropCar’s financial reports and the market price of DropCar’s common stock could be negatively affected. In addition, DropCar could become subject to investigations by the NASDAQ Capital Market, SEC or other regulatory authorities, which could require additional financial and management resources.
DropCar’s ability to use net operating loss carryforwards may be limited.
At December 31, 2016, DropCar had approximately $2,154,000 of operating loss carryforwards for federal and $2,154,000 New York state tax purposes that may be applied against future taxable income. DropCar also has approximately $2,154,000 of unused operating loss carryforwards for New York City purposes. The net operating loss carryforwards will begin to expire in the year 2035 if not utilized prior to that date. To the extent available, DropCar intends to use these net operating loss carryforwards to reduce the corporate income tax liability associated with its operations. The ability to utilize this net operating loss carryforwards may be limited under Section 382 of the Code, which apply if an ownership change occurs. To the extent DropCar’s use of net operating loss carryforwards is significantly limited, its income could be subject to corporate income tax earlier than it would if it were able to use net operating loss carryforwards, which could have a negative effect on its financial results.
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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus/information statement and the documents incorporated by reference into this proxy statement/prospectus/information statement contain forward-looking statements relating to WPCS, DropCar and the Merger. These forward-looking statements are based on current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. These forward-looking statements should not be relied upon as predictions of future events as DropCar and WPCS cannot assure you that the events or circumstances reflected in these statements will be achieved or will occur. You can identify forward-looking statements by the use of forward-looking terminology including “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “pro forma,” “estimates,” or “anticipates” or the negative of these words and phrases or other variations of these words and phrases or comparable terminology. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. For example, forward-looking statements include any statements regarding the strategies, prospects, plans, expectations or objectives of management of WPCS or DropCar for future operations of the combined company, the risk that the conditions to the Closing are not satisfied, including the failure to timely or at all obtain stockholder approval for the Merger; uncertainties as to the timing of the consummation of the Merger and the ability of each of WPCS and DropCar to consummate the Merger; risks related to WPCS’s ability to correctly estimate its operating expenses and its expenses associated with the Merger; risks related to the changes in market price of the WPCS common stock relative to the Exchange Ratio; competitive responses to the Merger; unexpected costs, charges or expenses resulting from the Merger; potential adverse reactions or changes to business relationships resulting from the announcement or completion of the Merger; and legislative, regulatory, political and economic developments. The foregoing review of important factors that could cause actual events to differ from expectations should not be construed as exhaustive and should be read in conjunction with statements that are included herein and elsewhere.
For a discussion of the factors that may cause WPCS, DropCar or the combined company’s actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied in such forward-looking statements, or for a discussion of risk associated with the ability of WPCS and DropCar to complete the Merger and the effect of the Merger on the business of WPCS, DropCar and the combined company, see “ Risk Factors ” beginning on page __.
Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in reports filed with the SEC by WPCS. See “ Where You Can Find More Information ” beginning on page ___. There can be no assurance that the Merger will be completed, or if it is completed, that it will close within the anticipated time period or that the expected benefits of the Merger will be realized.
If any of these risks or uncertainties materialize or any of these assumptions prove incorrect, the results of WPCS, DropCar or the combined company could differ materially from the forward-looking statements. All forward-looking statements in this proxy statement/prospectus/information statement are current only as of the date on which the statements were made. WPCS and DropCar do not undertake any obligation (and expressly disclaim any such obligation to) to publicly update any forward-looking statement to reflect events or circumstances after the date on which any statement is made or to reflect the occurrence of unanticipated events.
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THE SPECIAL MEETING OF WPCS STOCKHOLDERS
Date, Time and Place
The Special Meeting will be held on ________ __, 2018, at _______________________________, commencing at 9:30 a.m. local time. WPCS is delivering this proxy statement/prospectus/information statement to its stockholders in connection with the solicitation of proxies by the WPCS Board for use at the Special Meeting and any adjournments or postponements of the Special Meeting. This proxy statement/​prospectus/information statement is first being furnished to the WPCS stockholders on or about ______ __, 2017.
Purposes of the Special Meeting
The purposes of the Special Meeting are to:
1.
consider and vote upon a proposal to approve the Agreement and Plan of Merger and Reorganization, dated as of September 6, 2017, and as amended as of October 10, 2017 and November 21, 2017, by and among WPCS, Merger Sub and DropCar, a copy of which is attached as Annex A to this proxy statement/prospectus/information statement, and the transactions contemplated thereby, including the Merger and the issuance of shares of WPCS’ common stock to DropCar’s stockholders pursuant to the terms of the Merger Agreement;
2.
approve an amendment to the WPCS Charter effecting the WPCS Name Change, in the form attached as Annex B ;
3.
approve an amendment to the WPCS Charter effecting the Reverse Stock Split in the form attached as Annex C ;
4.
approve amendments to the Plan in the form attached as Annex D , to, among other things, increase the total number of shares of WPCS common stock currently available for issuance under the Plan by 6,450,000 shares, prior to giving effect to the Reverse Stock Split to be effected in connection with the Merger;
5.
consider and vote upon an adjournment of the Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the proposals set forth above; and
6.
transact such other business as may properly come before the stockholders at the Special Meeting or any adjournment or postponement thereof.
Each of WPCS Proposal Nos. 1, 2, 3 and 4 are conditioned upon each other and the approval of each such proposal is a condition to the completion of the Merger. Therefore, the Merger cannot be consummated without the approval of WPCS Proposal Nos. 1, 2, 3 and 4.
Recommendation of WPCS’ Board of Directors

The WPCS Board has determined that the transactions contemplated by the Merger Agreement are fair to, advisable and in the best interests of WPCS and WPCS stockholders and has approved and declared advisable the Merger Agreement and such transactions, including the issuance of shares of WPCS common stock to the DropCar stockholders pursuant to the terms of the Merger Agreement. The WPCS Board recommends that WPCS stockholders vote “FOR” Proposal No. 1 to approve the Merger Agreement and the transactions contemplated thereby.

The WPCS Board has determined that the WPCS proposal to change the name of the company to “DropCar, Inc.” is fair to, advisable and in the best interests of WPCS and WPCS stockholders and has approved and declared advisable the WPCS Name Change. The WPCS Board recommends that WPCS stockholders vote “FOR” Proposal No. 2 to approve an amendment to the WPCS Charter to effect the WPCS Name Change.

The WPCS Board has determined that the Reverse Stock Split is fair to, advisable and in the best interests of WPCS and WPCS stockholders and has approved and declared advisable the Reverse Stock Split. The WPCS Board recommends that WPCS stockholders vote “FOR” Proposal No. 3 to approve an amendment to the WPCS Charter effecting the Reverse Stock Split.
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The WPCS Board has determined that the amendments to the Plan are fair to, advisable and in the best interests of WPCS and WPCS stockholders and has approved and declared advisable the amendments to the Plan. The WPCS Board recommends that WPCS stockholders vote “FOR” Proposal No. 4 to approve the amendments to the Plan.

The WPCS Board has determined and believes that adjourning the Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1, 2, 3 or 4 is advisable to, and in the best interests of, WPCS and WPCS stockholders. The WPCS Board recommends that WPCS stockholders vote “FOR” Proposal No. 5 to adjourn the Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1, 2, 3 or 4.
Record Date and Voting Power
Only holders of record of WPCS common stock at the close of business on the Record Date, _________ __, 2018, are entitled to notice of, and to vote at, the Special Meeting. At the close of business on the Record Date, there were __ holders of record of WPCS common stock and there were _________ shares of WPCS common stock issued and outstanding. Each share of WPCS common stock entitles the holder thereof to one vote on each matter submitted for stockholder approval. See the section titled “ Principal Stockholders of WPCS ” beginning on page ___ of this proxy statement/prospectus/information statement for information regarding persons known to the management of WPCS to be the beneficial owners of more than 5% of the outstanding shares of WPCS common stock.
Voting and Revocation of Proxies
The proxy accompanying this proxy statement/prospectus/information statement is solicited on behalf of the WPCS Board for use at the Special Meeting.
If you are a stockholder of record of WPCS as of the Record Date, you may vote in person at the Special Meeting or vote by proxy using the enclosed proxy card. Whether you plan to attend the Special Meeting or not, WPCS urges you to vote by proxy to ensure your vote is counted. You may still attend the Special Meeting and vote in person if you have already voted by proxy. As a stockholder of record, you are entitled:

To vote in person — attend the Special Meeting and WPCS will give you a ballot when you arrive at the meeting;

To vote using the proxy card — mark, sign and date your proxy card and return it promptly, but in any event, before the Special Meeting to ensure your shares are voted; or

To vote by telephone or on the Internet — dial the number on the proxy card or go to the website on the proxy card or voting instruction form to complete an electronic proxy card. You will be asked to provide the company number and control number from the enclosed proxy card. Your vote must be received by _________ __, 2018, 11:59 p.m. Eastern Time to be counted.
If your WPCS shares are held by your broker as your nominee, that is, in “street name,” you should receive voting instructions from the bank, broker or other nominee that holds your shares. If you do not give instructions to your broker, your broker can vote your WPCS shares with respect to “discretionary” items but not with respect to “non-discretionary” items. Discretionary items are proposals considered routine under the rules of The NASDAQ Capital Market on which your broker may vote shares held in “street name” in the absence of your voting instructions. On non-discretionary items for which you do not give your broker instructions, the WPCS shares will be treated as broker non-votes. It is anticipated that WPCS Proposal Nos. 1, 2, 3 and 4 will be non-discretionary items. If your shares of WPCS common stock are held in “street name,” you may vote in one the following ways:

To vote by mail, you should follow the instructions included on the proxy card regarding how to instruct your broker to vote your shares of WPCS common stock.

To vote in person at the Special Meeting, you will need to contact the bank, broker or other nominee that is the stockholder of record for your shares to obtain a legal proxy and then bring
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the legal proxy indicating that you beneficially owned the shares as of the Record Date and a form of government issued picture identification to the Special Meeting. If you bring all these materials to the Special Meeting, you may vote by completing a paper proxy card or a ballot, which will be available at the Special Meeting. If you do not bring these materials, you will not be able to vote at the Special Meeting.

To vote by telephone or over the Internet if you are permitted and wish to do so, you should receive instructions from your bank, broker or other nominee and follow those instructions.
All properly executed proxies that are not revoked will be voted at the Special Meeting and at any adjournments or postponements of the Special Meeting in accordance with the instructions contained in the proxy. If a holder of WPCS common stock executes and returns a proxy and does not specify otherwise, the shares represented by that proxy will be voted as follows: “FOR” WPCS Proposal No. 1 to approve the Merger Agreement and the transactions contemplated thereby; “FOR” WPCS Proposal No. 2 to approve an amendment to the WPCS Charter effecting the WPCS Name Change; “FOR” WPCS Proposal No. 3 to approve an amendment to the WPCS Charter effecting the Reverse Stock Split; “FOR” WPCS Proposal No. 4 to approve amendments to the Plan, as amended; and “FOR” WPCS Proposal No. 5 to adjourn the Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of WPCS Proposal Nos. 1, 2, 3 and 4 in accordance with the recommendation of the WPCS Board.
If you are a stockholder of record of WPCS and you have not executed a support agreement, you may change your vote at any time before your proxy is voted at the Special Meeting in any one of the following ways:

you can send a written notice to the Secretary of WPCS before the Special Meeting stating that you would like to revoke your proxy;

if you have signed and returned a paper proxy card, you may sign a new proxy card bearing a later date and submit it as instructed above;

if you have voted by telephone or Internet, you may cast a new vote by telephone or over the Internet as instructed above; or

you can attend the Special Meeting and vote in person, but attendance alone will not revoke a proxy. You must specifically request at the meeting that it be revoked.
Required Vote
The presence, in person or represented by proxy, at the Special Meeting of the holders of 33 1 3 % of the shares of WPCS common stock outstanding and entitled to vote at the Special Meeting is necessary to constitute a quorum at the meeting. Abstentions and broker non-votes will be counted towards a quorum. The affirmative vote of the holders of a majority of the shares of WPCS common stock having voting power present in person or represented by proxy at the Special Meeting, assuming a quorum is present, is required for approval of WPCS Proposal Nos. 1, 4 and 5. The affirmative vote of the holders of a majority of shares of WPCS common stock entitled to vote outstanding on the Record Date for the Special Meeting is required for approval of WPCS Proposal Nos. 2 and 3. Each of WPCS Proposal Nos. 1, 2, 3 and 4 are conditioned upon each other and the approval of each such proposal is a condition to the completion of the Merger. Therefore, the Merger cannot be consummated without the approval of Proposal Nos. 1, 2, 3 and 4.
Votes will be counted by the inspector of election appointed for the meeting, who will separately count “FOR” and “AGAINST” votes, abstentions and broker non-votes. Abstentions will be counted towards the vote total for each proposal and will have the same effect as “AGAINST” votes for WPCS Proposal Nos. 2 and 3, but will have no effect on WPCS Proposal Nos. 1, 4 and 5. Similarly, broker non-votes will have the same effect as “AGAINST” votes for WPCS Proposal Nos. 2 and 3, but will have no effect on WPCS Proposal Nos. 1, 4 and 5.
The senior executive officers of WPCS ( i.e., Sebastian Giordano and David Allen), certain WPCS directors ( i.e., Charles Benton, Norm Dumbroff, Edward Gildea and Joshua Silverman) and certain holders of shares of WPCS convertible preferred stock and warrants to purchase shares of WPCS common stock ( i.e. , Alpha, Iroquois Capital Management LLC, Iroquois Capital Investment Fund and Brio Capital)
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entered into support agreements, with DropCar, pursuant to which they each have agreed to vote all shares of WPCS common stock owned by such person as of the Record Date in favor of WPCS Proposal Nos. 1, 2, 3, 4 and 5 and against any “acquisition proposal,” as defined in the Merger Agreement. As of November 15, 2017, none of these persons owned any shares of WPCS common stock. However, at such date they had the right to acquire, either by exercising their right to purchase shares of WPCS common stock or to convert shares of WPCS of convertible preferred stock into shares of WPCS common stock, up to 5,174,102 shares of WPCS common stock (prior to taking into account any limitations on their right to acquire or purchase shares of WPCS common stock).
Solicitation of Proxies
In addition to solicitation by mail, the directors, officers, employees and agents of WPCS may solicit proxies from WPCS stockholders by personal interview, telephone, telegram or otherwise. WPCS and DropCar will share equally the costs of printing and filing this proxy statement/prospectus/information statement and proxy card, provided that DropCar’s share of such expenses cannot exceed $125,000. Arrangements will also be made with brokerage firms and other custodians, nominees and fiduciaries who are record holders of WPCS common stock for the forwarding of solicitation materials to the beneficial owners of WPCS common stock. WPCS will reimburse these brokers, custodians, nominees and fiduciaries for the reasonable out-of-pocket expenses they incur for the forwarding of solicitation materials. WPCS has retained Alliance Advisors LLC to assist it in soliciting proxies using the means referred to above. WPCS will pay the fees of Alliance Advisors LLC, which WPCS expects to be approximately $12,000, plus reimbursement of out-of-pocket expenses.
Other Matters
As of the date of this proxy statement/prospectus/information statement, the WPCS Board does not know of any business to be presented at the Special Meeting other than as set forth in the notice accompanying this proxy statement/prospectus/information statement. If any other matters should properly come before the Special Meeting, it is intended that the shares represented by proxies will be voted with respect to such matters in accordance with the judgment of the persons voting the proxies.
Householding of Proxy Materials
The SEC has adopted rules that permit companies and intermediaries ( e.g., banks, brokers, trustees or other nominees) to satisfy the delivery requirements for proxy statements with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly, referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies. Each stockholder who participates in “householding” will continue to receive a separate proxy card. Under the DGCL, stockholders must consent to “householding” and any stockholder who fails to object in writing to the corporation within sixty (60) days of having been given written notice by the corporation of its intent to “household” is deemed to have consented to “householding.”
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THE MERGER
This section and the section entitled “The Merger Agreement” in this proxy statement/prospectus/​information statement describe the material aspects of the Merger, including the Merger Agreement. While WPCS and DropCar believe that this description covers the material terms of the Merger and the Merger Agreement, it may not contain all of the information that is important to you. You should read carefully this entire proxy statement/prospectus/information statement for a more complete understanding of the Merger and the Merger Agreement, including the Merger Agreement attached to this proxy statement/prospectus/​information statement as Annex A, the opinion of Gordian attached as Annex E, and the other documents to which you are referred herein. See the section entitled “Where You Can Find More Information” in this proxy statement/prospectus/information statement.
Background of the Merger
Since 2013, WPCS has pursued a strategic agenda with a consistent focus of increasing stockholder value by looking at various related businesses that offered products and services complementary to WPCS’ business as well as unrelated business alternatives as part of its ongoing effort to strengthen WPCS’ financial position and potentially enhance value for WPCS stockholders.
In August 2013, the WPCS Board named Sebastian Giordano, then one of its independent board members, as its interim chief executive officer with the directive to facilitate a restructuring of WPCS, while it pursued such strategic alternatives. The overall goal of such restructuring plan was to improve the WPCS balance sheet in order to best position WPCS for a potential transaction or transactions that would be in the best interest of its stockholders.
From 2013 through 2016, WPCS aggressively advanced its agenda in line with this strategic framework by: (i) selling or closing all of its domestic and international operations, other than its profitable Suisun City Operations; (ii) eliminating substantially all secured and unsecured debt; (iii) overcoming several NASDAQ continued listing requirement deficiencies; (iv) recovering substantial sums under various settlement agreements; and (iv) substantially reducing corporate overhead.
At the same time, between 2015 and the beginning of 2017, when WPCS began exploring the initiative with DropCar, WPCS, independently and with the assistance of investment advisors, performed a comprehensive review of a number of strategic business alternatives in industries related and unrelated to the WPCS core business, including acquisition and merger targets identified by management or presented to management by third parties.
During this period, as part of this ongoing strategic agenda, representatives of WPCS had exchanges with more than 35 companies in industries related and unrelated to the industries in which WPCS operates, regarding potential business combination and other strategic transactions, acquisitions and joint ventures. Except as noted below, none of these discussions proceeded beyond the exploratory phase due to the misalignment of the goals of WPCS and the counterparty and/or WPCS’s conclusion that the opportunity would not result in the enhancement of WPCS stockholder value.
Between 2015 and 2017, WPCS engaged in more extensive investigation, due diligence and negotiations with five companies with respect to a prospective business combination transaction: (i) a privately-held company in the audio-visual industry in 2015, which we refer to as Company A; (ii) a privately-held company in the video gaming industry in late 2015, which we refer to as Company B; (iii) a publicly-held company in the technology and telecommunications industry in the latter half of 2015 and into 2016, which we refer to as Company C; (iv) a privately-held company in the technology infrastructure industry in late 2016, which we refer to as Company D; and (v) a publicly-held company in the telecommunications infrastructure industry in late 2016, which we refer to as Company E. Each such opportunity was abandoned by WPCS or the counterparty for business related considerations, as follows: (i) Company A initially determined to pursue a traditional initial public offering of its securities and when that failed and it reengaged with WPCS Company A’s financial condition had significantly deteriorated making it undesirable; (ii) Company B both showed no ability to complete a financing necessary to complete a merger and would not agree to a relative equity split that WPCS believed fair; (iii) Company C decided to pursue a large private company acquisition and uplist to NASDAQ on its own, rather than pursuing a transaction
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with WPCS; (iv) WPCS determined that the DropCar transaction provided a better value proposition to WPCS’s stockholders and it terminated discussions with Company D; and (v) Company E terminated discussions with WPCS after it received approval for uplisting to the NASDAQ Stock Market.
On January 15, 2017, the DropCar opportunity was introduced to WPCS’ management by Michael Hartstein, an investment banker with Palladium Capital Advisors (“Palladium”), through the delivery to Mr. Giordano of a DropCar PowerPoint presentation and related materials. Palladium had acted as placement agent in connection with the Series H-2 private placement financing consummated by WPCS in December 2016. Mr. Hartstein presented the opportunity following a meeting on January 10, 2017 with representatives of Alpha, the lead investor in the December 2016 WPCS private placement, Brio Capital Master Fund (“Brio”), another investor in the December 2016 private placement, Mr. Hartstein and Mr. Giordano in Alpha’s offices. During that meeting, the parties discussed how to further enhance WPCS’ stockholder value. During this discussion, Mr. Hartstein, representatives of Alpha and representatives of Brio asked Mr. Giordano if WPCS would consider merger opportunities not directly synergistic with WPCS’s existing business. Mr. Giordano indicated that the WPCS Board would consider both synergistic and non-synergistic opportunities in its ongoing initiative to enhance stockholder values.
Upon receipt, Mr. Giordano reviewed the DropCar materials and expressed interest in learning more about the DropCar opportunity. A mutual non-disclosure agreement was executed and exchanged on January 19, 2017 in advance of a meeting on that date among Mr. Giordano, Mr. Hartstein and Spencer Richardson, DropCar’s chief executive officer. The meeting, which was the first introduction of senior management of both companies, included both sides providing an update on their respective businesses and strategic plans. At the conclusion of the meeting, both parties expressed interest in pursuing a possible business combination transaction and Mr. Hartstein indicated that he would provide WPCS with an outline of a term sheet for a proposed merger transaction.
On January 24, 2017, Mr. Giordano received a proposed term sheet for a merger of DropCar into WPCS from Mr. Hartstein. Mr. Giordano requested DropCar financial statements and financial forecasts from Mr. Hartstein to facilitate WPCS’s review and analysis of the terms proposed, which he received on January 27, 2017. Over the ensuing days, Mr. Giordano asked questions and received responses from Mr. Hartstein with respect to the DropCar financial projections.
Following review by WPCS’s then legal counsel, on February 3, 2017, a marked draft of the term sheet was provided by Mr. Giordano to Mr. Hartstein. Between February 3 rd and 6 th , there were ongoing exchanges between WPCS and DropCar relating to the DropCar financial projections. A face-to-face follow-up meeting was scheduled for February 13, 2017 to further discuss the DropCar business plan and related financial projections.
On February 13, 2017, Mr. Giordano and WPCS’ financial advisor met with DropCar’s senior management and Mr. Hartstein. In advance of the meeting, on February 12, 2017, DropCar had provided WPCS with a set of updated financial projections, the review and analysis of which was the focus of the meeting.
On February 16, 2017, Mr. Giordano convened a telephonic conference call with the members of the WPCS Board during which he updated them on the status of strategic initiatives, including the DropCar opportunity. The WPCS Board encouraged Mr. Giordano to continue his discussions with DropCar and pursue the execution of a non-binding letter of intent (“LOI”).
Between February 17, 2017 and February 22, 2017, ongoing exchanges of drafts of the LOI and related negotiations ensued culminating in the execution and exchange of a LOI on February 22, 2017. That LOI contemplated an 87.5%/12.5% equity split post-merger among DropCar and WPCS security holders, respectively.
During the two months following the execution of the LOI, each party provided the other party with extensive due diligence requests and each party populated a data room to facilitate the other party’s due diligence investigation. Numerous exchanges occurred between the parties seeking clarifications and incremental information.
On April 25, 2017, Mr. Giordano received an initial draft of the merger agreement, prepared by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (“Mintz”), counsel to DropCar, from Mr. Hartstein.
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On April 28, 2017, the WPCS Board established a special committee of the Board (the “Special Committee”), comprised of Charles Benton, Edward Gildea and Joshua Silverman, each independent members of the WPCS Board, to oversee the proposed merger transaction with DropCar. In addition, WPCS engaged Morse, Zelnick, Rose and Lander, LLP (“MZRL”) as its new corporate counsel.
On May 3, 2017, an initial meeting of the Special Committee was telephonically convened with all members present together with representatives of MZRL. The agenda addressed, among other items: (i) the role of the Special Committee and operating protocol; (ii) an overview of the proposed transaction and a projected timeline; (iii) key issues including valuation, scope of representations and warranties, treatment of options, tail insurance coverages and deal certainty; (iv) the advisability of obtaining a fairness opinion; and (v) matters related to the WPCS NASDAQ Capital Market listing.
On May 5, 2017, representatives of Mintz and MZRL held a conference call to discuss numerous aspects of the proposed merger transaction including the prospects for continuation of the WPCS NASDAQ Capital Market listing of its common stock through the pendency of the transaction and following the consummation of the Merger.
On May 12, 2017, a meeting of the Special Committee was telephonically convened with all members present together with representatives of MZRL. The agenda addressed, among other items: (i) an update on the proposed transaction and deal activity including due diligence initiatives; (ii) key merger agreement terms, including valuation, indemnification, working capital thresholds, fiduciary outs, closing conditions termination rights and related break-up fees and support and lock-up agreements; (iii) fairness opinion matters; and (iii) NASDAQ listing and related merger financing matters. MZRL took guidance from the Special Committee on numerous issues related to its review and revision of the merger agreement.
On May 16, 2017, a “kick-off meeting” was held at the office of Mintz with representatives of Mintz and MZRL present together with senior management of both WPCS and DropCar and Mr. Hartstein. Mr. Richardson and Mr. Newman, DropCar’s chief executive officer and chief business development officer, respectively, provided a detailed presentation on the DropCar business and business plan and prospects which led to extensive question and discussions. Incrementally, certain business considerations with respect to the merger terms were touched upon.
Throughout May and June, 2017, each party continued to conduct its respective due diligence investigation on the other party.
On May 22, 2017, MZRL provided Mintz with a revised draft of the merger agreement which addressed numerous items previously discussed and other general comments on the form of agreement previously presented, including WPCS’s cash position as of the closing date of the Merger, the elimination of DropCar fiduciary-out and the treatment of WPCS’s outstanding stock options.
On May 23, 2017, a due diligence meeting was held at the offices of DropCar among WPCS’s chief executive officer and chief financial officer and DropCar’s chief executive officer and chief business and development officer.
On June 5, 2017, after evaluating several proposals, the Special Committee retained the services of Gordian Investments, LLC (“Gordian”) to render a fairness opinion with respect to the proposed merger transaction. Throughout June, Gordian held diligence meetings with members of management of each of DropCar and WPCS.
On June 6, 2017, a meeting of the Special Committee was telephonically convened with all members present together with representatives of MZRL. The agenda addressed, among other items: (i) an update on deal activity including due diligence initiatives, the status of the Merger Agreement and ancillary documents including support agreements and lock-up agreements and the DropCar December 31, 2016 audit; (ii) the retention of Gordian as bankers to render a fairness opinion; (iii) cash flow, transaction expenses and closing cash requirement matters; (iv) internal communication plans and strategies; and (v) merger agreement open issues including the advisability of a DropCar fiduciary out, WPCS closing cash requirements, the treatment of outstanding WPCS options and break-up fees. MZRL took guidance from the Special Committee on numerous issues related to its review and revision of the current draft of the Merger Agreement.
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On June 22, 2017, Mintz provided MZRL with a revised draft of the Merger Agreement following several prior conference calls addressing outstanding issues including the proposed terms of the Merger Financing, the determination of the Exchange Ratio, the entry into lock-up agreements, the treatment of WPCS’s outstanding stock options, WPCS’s cash position as of the closing date of the Merger and certain termination rights.
On July 5, 2017, the Special Committee held a meeting to discuss the revised draft of the Merger Agreement, including items related to financing, WPCS cash requirements, lock-up agreements, treatment of WPCS options and timing considerations. Following this meeting, representatives of MZRL provided a high-level “open-issues” list to representatives of Mintz, which Mintz responded to on July 9, 2017. As a result, an all-hands-on meeting was scheduled to be held in Mintz’s offices on July 17, 2017.
On July 17, 2017, a meeting was held at Mintz’s offices. In attendance for WPCS were its chief executive officer and chief financial officer, the three members of the Special Committee and representatives of MZRL; in attendance for DropCar were its chief executive officer, its chief business and development officer, Mr. Hartstein and representatives of Mintz. Mr. Gildea, a member of the Special Committee was designated as the WPCS spokesperson for the meeting. The meeting agenda first confirmed the points that had been agreed upon pursuant to the recent exchanges between Mintz and MZRL and next turned to open issues, including: (i) the post-merger WPCS Board composition; (ii) the terms of proposed lock-up agreements post-merger; (iii) the treatment of stock options; (iv) break-up fees and expense reimbursements; and (v) the allocation of equity. At the meeting, agreement was reached on (i) the post-merger WPCS Board composition; and (ii) the lock-up agreement terms; and (iii) break-up fees and expense reimbursements. DropCar reserved on the equity allocation and WPCS stock option issues and agreed to imminently provide WPCS with a final proposal on these points.
On July 19, 2017, Mr. Hartstein emailed representatives of MZRL and WPCS a proposed revised cap-structure on behalf of DropCar. The revised proposal addressed WPCS’s managements concern regarding how certain outstanding WPCS options would be treated post-merger. It also reflected the 85%/15% post-merger equity allocation between DropCar and WPCS securityholders.
On July 20, 2017, the parties agreed to the revised cap-table proposal and formally accepted the proposed changes related to the treatment of WPCS options.
Between July 23, 2017 and August 10, 2017, Mintz and MZRL exchanged drafts of the merger agreement reflecting the updated terms agreed to. Ongoing negotiations ensued on the WPCS Net Cash requirement at the closing and the amount of capital that DropCar was required to raise in advance of the closing of the Merger, as well as the treatment of the DropCar Warrants.
On August 3, 2017, a meeting of the Special Committee was telephonically convened with all members present together with representatives of MZRL. The agenda addressed, among other items: (i) an update on deal activity including due diligence initiatives, the preparation of the respective parties’ disclosure schedules and the status of the DropCar June 30, 2017 interim financial statements; (ii) open issues on the Merger Agreement including the threshold amount of the Merger Financing, the treatment of the DropCar Warrants and the allocation of transactional expenses; (iii) an update on the status of the Gordian analysis and fairness opinion; (iv) an analysis of WPCS cash flow and related closing cash requirement matters; and (v) transactional timing considerations. MZRL took guidance from the Special Committee on numerous issues related to its review and revision of the current draft of the Merger Agreement.
Between August 15, 2017 and August 17, 2017, representatives of MZRL provided revised drafts of the Merger Agreement to Mintz which included agreed upon terms with respect to both the WPCS Net Cash requirement at the closing and the amount of capital that DropCar was required to raise in advance of the closing of the Merger. On August 17, 2017, agreement in principal was reached on the proposed final form of Merger Agreement.
On August 20, 2017, an update call was held among all members of the WPCS Board and representatives of MZRL. The WPCS Board was advised that the Merger Agreement was in substantially final form for submission to the Special Committee and the WPCS Board for consideration and approval. Representatives of MZRL further advised the WPCS Board that WPCS would need to impose a “black-out” period under the registration statements covering the securities issued in the H-1, H-2 and H-3
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private placement financings until an S-4 registration statement with respect to the Merger was filed with the SEC, which would expose WPCS to specified liquidated damages as well as potentially indeterminable damages under the registration rights agreements entered into in connection with the private placement financings. The WPCS Board directed representatives of MZRL to enter into negotiations with representatives of the respective equity holders to minimize WPCS’s exposure.
Between August 21, 2017 and August 31, 2017, representatives of MZRL negotiated a waiver agreement with the representatives of the H-1, H-2 and H-3 investors limiting WPCS exposure for “non-registration” to $31,000 for the period through October 11, 2017, the date specified in the Merger Agreement for the filing of the S-4 registration statement.
On August 14, 2017, August 18, 2017 and September 1, 2017, packages were provided to all members of the WPCS Board containing the Merger Agreement and related agreements, the Gordian presentation and the proposed form of Gordian fairness opinion, together with related information for review by the members of the WPCS Board.
On September 5, 2017, the Special Committee held a telephonic meeting which was attended by all members of the Special Committee, WPCS’s chief executive officer and chief financial officer, representatives of Gordian and representatives of MZRL. The steps taken by the Special Committee to ensure a thorough review and consideration of the terms of the Merger Agreement, including retention of Gordian and MZRL were reviewed. Also at the meeting, representatives of MZRL reviewed with the Special Committee the terms of the Merger Agreement that had been circulated to the Special Committee in advance of the meeting. Representatives of MZRL also reviewed with the participants the final forms of the support agreement and lock-up agreement to be entered into by the directors and officers and certain significant stockholders of DropCar. The Special Committee then engaged in a discussion of the terms of the Merger Agreement and the other transaction documents and asked questions of the representatives of MZRL regarding the Merger Agreement, which were answered during MZRL’s presentation. Representatives of MZRL reviewed with the Special Committee the Special Committee’s fiduciary duties under Delaware law in connection with the consideration of the Merger Agreement and the transactions contemplated therein. Representatives of Gordian then reviewed its final valuation analysis and fairness opinion as circulated to the Special Committee in advance of the meeting and delivered its oral opinion (subsequently confirmed in writing and attached hereto as Annex E ) to the effect that, as of the date of the meeting, and based upon and subject to the considerations, limitations and other matters set forth in its written opinion, the Exchange Ratio was fair, from a financial point of view, to WPCS stockholders. During the presentations, members of the Special Committee asked questions and discussed the revised terms of the Merger Agreement and Gordian’s valuation analysis and fairness opinion. After these presentations and discussions, the Special Committee determined that the Merger Agreement and the transactions contemplated thereby maximized value for WPCS stockholders as compared to the other transactions that had been presented and unanimously agreed that the Special Committee recommend approval of the Merger Agreement and the transactions contemplated thereby to the WPCS Board.
On September 5, 2017, following the Special Committee meeting, the WPCS Board held a telephonic meeting which was attended by all members of the WPCS Board, members of WPCS’ management, representatives of Gordian and representatives of MZRL. At the meeting, the steps taken by the Special Committee to ensure a thorough review and consideration of the terms of the Merger Agreement, including retention of Gordian and MZRL were reviewed. Also at the meeting, representatives of MZRL reviewed with the WPCS Board the revised terms of the Merger Agreement that had been circulated to the WPCS Board in advance of the meeting. Representatives of MZRL also reviewed with the participants the final forms of the support agreement and lock-up agreement to be entered into by the directors and officers and certain significant stockholders of DropCar. The WPCS Board then engaged in a discussion of the terms of the Merger Agreement and the other transaction documents and asked questions of the representatives of MZRL regarding the Merger Agreement, which were answered during MZRL’s presentation. Representatives of MZRL reviewed with the WPCS Board the WPCS Board’s fiduciary duties under Delaware law in connection with the consideration of the Merger Agreement and the transactions contemplated thereby. Representatives of MZRL advised the Board that at its meeting earlier that day the Special Committee had unanimously approved recommending approval of the Merger Agreement and the transactions contemplated thereby to the WPCS Board. Representatives of Gordian then reviewed its final
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valuation analysis and fairness opinion as circulated to the WPCS Board in advance of the meeting and delivered its oral opinion (subsequently confirmed in writing and attached hereto as Annex E ) to the effect that, as of the date of the meeting, and based upon and subject to the considerations, limitations and other matters set forth in its written opinion, the Exchange Ratio was fair, from a financial point of view, to WPCS stockholders. During the presentations, members of the WPCS Board asked questions and discussed the revised terms of the Merger Agreement and Gordian’s valuation analysis and fairness opinion. After these presentations and discussions, representatives of MZRL reviewed with the WPCS Board the proposed resolutions that had been provided to the WPCS Board in advance of the meeting. Following review and discussion amongst the participants, the WPCS Board (i) determined that the transactions contemplated by the Merger Agreement, including the Merger and the issuance of shares of WPCS common stock to DropCar stockholders pursuant to the Merger Agreement were fair to, advisable and in the best interest of WPCS and WPCS stockholders; (ii) approved and declared advisable the Merger Agreement and the transactions contemplated therein, including the Merger and the issuance of shares of WPCS common stock to DropCar stockholders, and (iii) determined to recommend, upon the terms and subject to the conditions of the Merger Agreement, that WPCS stockholders vote to approve the Merger Agreement and the transactions contemplated therein, including the Merger and the issuance of shares of WPCS common stock to DropCar stockholders and, if deemed necessary, the Reverse Stock Split. Following the meeting, the Merger Agreement and related documents were executed and delivered in escrow by WPCS, DropCar and the other applicable parties.
On September 6, 2017, all signatures were released from escrow. Following execution of the Merger Agreement, WPCS and DropCar issued a joint press release announcing the execution of the Merger Agreement and the related documents prior to the open of trading of shares of WPCS common stock on September 6, 2017.
On October 5, 2017, representatives from Mintz and MZRL had a telephone conversation to discuss the need for an amendment to the Merger Agreement to correct a scrivener’s error regarding the percentage of merger consideration to be allocated to Alpha in connection with Alpha’s agreement to fund the Merger Financing.
On October 10, 2017, all parties signed Amendment No. 1 to the Merger Agreement to correct a scrivener’s error regarding the percentage of merger consideration to be allocated to Alpha in connection with Alpha’s agreement to fund the Merger Financing.
On November 21, 2017, all parties signed Amendment No. 2 to the Merger Agreement to increase the size of the board of directors of the combined company.
WPCS Reasons for the Merger
The WPCS Board considered the following factors in reaching its conclusion to approve and adopt the Merger Agreement and the transactions contemplated thereby and to recommend that the WPCS stockholders approve the Merger, adopt the Merger Agreement and other transactions contemplated by the Merger Agreement, including the issuance of shares of WPCS common stock in the Merger and the business combination with DropCar:

The WPCS Board believes, based in part on the judgment, advice and analysis of WPCS management with respect to the potential strategic, financial and operational benefits of the Merger (which judgment, advice and analysis was informed in part on the business, technical, financial, accounting and legal due diligence investigation performed with respect to DropCar), that:

the combined company will be led by an experienced senior management team from DropCar and a board of directors, a majority of whose members will be designated by DropCar; and

consummation of the Merger is conditioned on DropCar raising up to $5.0 million, but not less than $4.0 million, prior to the closing of the Merger, which is expected to provide sufficient capital to advance DropCar’s strategic plan.
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DropCar has the potential, if successful, to create value for the stockholders of the combined company and present the combined company with additional fund-raising opportunities in the future.

The WPCS Board also reviewed with the management of WPCS the current plans of DropCar for continuing to expand its business to confirm the likelihood that the combined company would possess sufficient financial resources to allow management to continue to operate and maintain the Suisun City Operations while at the same time focus on the continued development of DropCar’s product and service offerings and expansion into new markets.

The WPCS Board also considered the possibility that that combined company would be able to take advantage of the potential benefits resulting from the combination of WPCS and DropCar to raise additional funds in the future.

The WPCS Board considered the opportunity, as a result of the Merger, for WPCS stockholders to participate in the potential value that may result from development of the DropCar business and the potential increase in value of the combined company following the Merger.

The WPCS Board considered the opinion of Gordian delivered to the WPCS Board (in its capacity as such) that, as of September 5, 2017 and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations set forth in the opinion, that the Merger was fair to the WPCS stockholders from a financial point of view, as more fully described below under the section titled “ The Merger — Opinion of WPCS’s Financial Advisor.

The WPCS Board also reviewed various factors impacting the financial condition, results of operations and prospects for WPCS, including:

the strategic alternatives of WPCS to the Merger, including potential transactions that could have resulted from discussions that WPCS management conducted with other potential merger partners;

the consequences of current market conditions, WPCS’ current liquidity position, its depressed stock price and continuing net operating losses, and the likelihood that the resulting circumstances of WPCS would not change for the benefit of the WPCS stockholders in the foreseeable future on a stand-alone basis;

the risks of continuing to operate WPCS on a stand-alone basis, including the need to continue to support its current business with insufficient capital resources; and

WPCS management’s belief that it would be difficult to obtain additional equity or debt financing on acceptable terms, if at all.
The WPCS Board also reviewed the terms and conditions of the proposed Merger Agreement and associated transactions, as well as the safeguards and protective provisions included therein intended to mitigate risks, including:

the Exchange Ratio used to establish the number of shares of WPCS common stock to be issued in the Merger, and the expected relative percentage ownership of WPCS stockholders and DropCar stockholders immediately following the completion of the Merger;

the amount of the Merger Financing to be consummated by DropCar immediately prior or simultaneously with the Merger and the fact that it will be included in DropCar’s 85% allocation percentage;

the limited number and nature of the conditions to the DropCar obligation to consummate the Merger and the limited risk of non-satisfaction of such conditions as well as the likelihood that the Merger will be consummated on a timely basis;

the respective rights of, and limitations on, WPCS and DropCar under the Merger Agreement to consider certain unsolicited acquisition proposals under certain circumstances should WPCS or DropCar receive a superior competing proposal;
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the reasonableness of the potential termination fee of  $250,000 or expense reimbursements of up to $125,000, which could become payable by either WPCS or DropCar if the Merger Agreement is terminated in certain circumstances;

the support agreements, pursuant to which certain directors, officers and affiliated stockholders of DropCar agreed, solely in their capacity as stockholders, to vote all their shares of DropCar capital stock in favor of adoption of the Merger Agreement;

the agreement of DropCar to provide the DropCar Stockholder Consent within two (2) business days of the registration statement on Form S-4, of which this proxy statement/prospectus/​information statement is a part, becoming effective; and

the belief that the terms of the Merger Agreement, including the parties’ representations, warranties and covenants, and the conditions to their respective obligations, are reasonable under the circumstances.
In its deliberations relating to the Merger, the WPCS Board also considered a variety of risks and other countervailing factors related to the Merger, including:

the $250,000 termination fee or expense reimbursements of up to $125,000 that may be payable by WPCS to DropCar upon the occurrence of certain events, and the potential effect of such termination fee or reimbursement of transaction expenses in deterring other potential acquirors from proposing a competing transaction that may be more advantageous to WPCS stockholders;

the substantial expenses to be incurred in connection with the Merger;

the possible volatility, at least in the short term, of the trading price of the WPCS common stock resulting from the Merger announcement;

the risk that the Merger might not be consummated in a timely manner, or at all, and the potential adverse effect of the public announcement of the Merger or on the delay or failure to complete the Merger on the reputation of WPCS;

the risk to WPCS’ business, operations and financial results in the event the Merger is not consummated;

the strategic direction of the continuing entity following the completion of the Merger, which will be determined by a board of directors, a majority of which will be designated by DropCar;

the fact that the Merger would give rise to substantial limitations on the utilization of WPCS’ net operating loss carry-forwards; and

various other risks associated with the combined company and the Merger, including those described in the section titled “ Risk Factors ” in this proxy statement/prospectus/information statement.
The foregoing information and factors considered by the WPCS Board are not intended to be exhaustive, but are believed to include all the material factors considered by the WPCS Board. In view of the wide variety of factors considered in its evaluation of the Merger and the complexity of these matters, the WPCS Board did not find it useful to attempt, and did not attempt, to quantify, rank or otherwise assign relative weights to these factors. In considering the factors described above, individual members of the WPCS Board may have given different weight to different factors. The WPCS Board conducted an overall analysis of the factors described above, including thorough discussions with, and questioning of, the WPCS management team and the legal and financial advisors of WPCS, and considered the factors overall to be favorable to, and to support, its determination.
DropCar Reasons for the Merger
The following discussion sets forth material factors considered by the DropCar Board in reaching its determination to authorize the Merger Agreement and approve the Merger; however, it may not include all of the factors considered by the DropCar Board. In light of the number and wide variety of factors considered in connection with its evaluation of the Merger Agreement and the Merger, the DropCar Board
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did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative weights to the specific factors it considered in reaching its determination. The DropCar Board viewed its position and determinations as being based on all of the information available and the factors presented to and considered by it. In addition, individual directors may have given different weight to different factors.
In the course of reaching its decision to approve the Merger, DropCar’s Board consulted with DropCar’s senior management, financial and tax advisors and legal counsel, reviewed a significant amount of information and considered a number of factors, including, among others:

historical and current information concerning DropCar’s business, including its financial performance and condition, operations, management and competitive position;

the potential increased access to sources of capital and a broader range of investors to support the development of DropCar’s business following consummation of the transaction compared to if DropCar continued to operate as a privately held company;

the potential to provide its current securityholders with greater liquidity by owning stock in a public company;

the DropCar Board’s belief that no alternatives to the Merger were reasonably likely to create greater value for DropCar stockholders, after reviewing the various financing and other strategic options to enhance stockholder value that were considered by the DropCar Board;

the cash resources of the combined company expected to be available at the closing of the Merger relative to the anticipated burn rate of the combined company;

the availability of appraisal rights under the DGCL to holders of DropCar’s capital stock who comply with the required procedures under the DGCL, which allow such holders to seek appraisal of the fair value of their shares of DropCar capital stock as determined by the Delaware Court of Chancery;

the expectation that the Merger with WPCS would be a higher probability and more cost-effective means to access capital than other options considered by the DropCar Board, including additional private financings or an initial public offering;

the terms and conditions of the Merger Agreement, including, without limitation, the following:

the determination that the expected relative percentage ownership of WPCS’ stockholders and DropCar’s securityholders in the combined organization was appropriate based, in the judgment of the DropCar Board, on the DropCar Board’s assessment of the approximate valuations of WPCS (including the value of the net cash and the business that WPCS is expected to provide to the combined organization) and DropCar;

the expectation that the Merger will be treated as a reorganization for U.S. federal income tax purposes;

the limited number and nature of the conditions of the obligation of WPCS to consummate the Merger;

the conclusion of the DropCar Board that the potential termination fee of  $250,000, and/or in some situations the reimbursement of certain transaction expenses incurred in connection with the Merger of up to $125,000, payable by WPCS or DropCar to the other party, and the circumstances when such fee may be payable, were reasonable; and

the belief that the other terms of the Merger Agreement, including the parties’ representations, warranties and covenants, and the conditions to their respective obligations, were reasonable in light of the entire transaction;

the fact that shares of WPCS common stock issued to DropCar securityholders will be registered on a Form S-4 registration statement and will become freely tradable for DropCar securityholders who are not affiliates of DropCar and who are not parties to lock-up agreements;
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the support agreements, pursuant to which certain directors, officers and stockholders of WPCS and DropCar, respectively, have agreed, solely in their capacity as stockholders of WPCS and DropCar, respectively, to vote all of their shares of WPCS capital stock or DropCar capital stock in favor of the adoption or approval, respectively, of the Merger Agreement;

the ability to obtain a NASDAQ listing and the fact that WPCS will change its name to “DropCar, Inc.” upon the closing of the Merger;

the fact that the proposed Merger may enable certain stockholders of WPCS and DropCar to increase the value of their current shareholding; and

the likelihood that the Merger will be consummated on a timely basis.
The DropCar Board also considered a number of uncertainties and risks in its deliberations concerning the Merger and the other transactions contemplated by the Merger Agreement, including the following:

the possibility that the Merger might not be completed and the potential adverse effect of the public announcement of the Merger on the reputation of DropCar and the ability of DropCar to obtain financing in the future in the event the Merger is not completed;

the determination by the DropCar Board that an exchange ratio that is not subject to adjustment based on trading prices is appropriate to determine relative percentage ownership of WPCS and DropCar securityholders;

the termination fee of  $250,000, and/or in some situations the reimbursement of certain transaction expenses incurred in connection with the Merger of up to $125,000, payable by DropCar to WPCS upon the occurrence of certain events, and the potential effect of such termination fee in deterring other potential acquirers from proposing an alternative transaction that may be more advantageous to the DropCar stockholders;

the risk that the Merger might not be consummated in a timely manner or at all;

the expenses to be incurred in connection with the Merger and related administrative challenges associated with combining the companies;

the additional expenses and obligations to which the DropCar business will be subject following the Merger that DropCar has not previously been subject to, and the operational changes to DropCar’s business, in each case that may result from being a public company;

the fact that the representations and warranties in the Merger Agreement do not survive the closing of the Merger and the potential risk of liabilities that may arise post-closing; and

various other risks associated with the combined organization and the Merger, including the risks described in the section entitled “Risk Factors” in this proxy statement/prospectus/information statement.
The DropCar Board weighed the benefits, advantages and opportunities of a potential transaction against the uncertainties and risks described above, as well as the possible diversion of management attention for an extended period of time. After taking into account these and other factors, the DropCar Board approved and authorized the Merger Agreement and the transactions contemplated thereby, including the Merger.
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Opinion of WPCS Financial Advisor
Scope of the Assignment
In June 2017, the Special Committee of the WPCS Board engaged Gordian to provide a written opinion (the “Opinion”) to the Special Committee and the WPCS Board as to the fairness, from a financial point of view, of the Merger. At the September 5, 2017 meeting of the Special Committee and the WPCS Board, Gordian rendered its oral opinion, subsequently confirmed by delivery of a written opinion dated September 5, 2017, to the Special Committee that, as of the date of such opinion, and based upon the assumptions made, procedures followed, matters considered, and qualifications and limitations of the review set forth in its written opinion, the Merger is fair, from a financial point of view, to WPCS stockholders.
The full text of Gordian’s written opinion, which sets forth the procedures followed, assumptions made, matters considered, and qualifications and limitations of the review undertaken in connection with such opinion, is attached to this proxy statement/prospectus/information statement as Annex E and is incorporated by reference in its entirety to this proxy statement/prospectus/information statement.
Gordian’s opinion is for the information of the Special Committee and the WPCS Board in connection with its evaluation of the Merger, and does not constitute a recommendation to the Special Committee or the WPCS Board in connection with the Merger. Gordian’s opinion was not intended to be used for any other purpose without Gordian’s prior written consent in each instance, except as expressly provided for in the engagement letter between WPCS and Gordian. Gordian has consented to the use of Gordian’s opinion in this proxy statement/prospectus/information statement. Gordian’s opinion does not in any manner address the underlying business decision of WPCS or any other party to engage in the Merger, nor does it address the relative merits of the Merger as compared with any alternative business transaction or strategy. The decision as to whether to proceed with the Merger or any related transaction may depend on an assessment of factors unrelated to the financial analysis on which this opinion is based. In addition, Gordian is not expressing any opinion as to the market price or value of the capital securities of any party to the Merger after announcement of the Merger. Gordian’s opinion did not constitute a recommendation to the WPCS Board or to any WPCS stockholder as to how such stockholder should vote with respect to the Merger or otherwise.
The following summary of Gordian’s opinion is qualified in its entirety by reference to the full text of such opinion.
For purposes of its opinion and in connection with its review, Gordian, among other things:

reviewed a draft of the Merger Agreement dated as of September 6, 2017, including without limitation the terms and conditions of the Merger;

reviewed and analyzed certain publicly available financial statements and reports regarding WPCS;

reviewed the reported prices and trading activity for WPCS common stock;

reviewed certain internal financial analyses, historical financials, financial forecasts, reports, operating performance and other information Gordian deemed relevant concerning WPCS and DropCar, all of which was provided to Gordian by or on behalf of the management of WPCS and DropCar;

held discussions with certain members of the management of WPCS and DropCar concerning the h