XI'AN, China, June 25, 2014 /PRNewswire-FirstCall/ -- Kingtone
Wirelessinfo Solution Holding Ltd (Nasdaq: KONE) (Kingtone", we" or
the Company"), a China-based
developer and provider of mobile enterprise solutions, today
announced financial results for the six months ended March 31, 2014. The financial statements and
other financial information included in this press release are
prepared in conformity with accounting principles generally
accepted in the United States of
America (U.S. GAAP").
Financial Highlights for the Six Months Ended March 31, 2014:
- Revenues increased 21.9% to $3.6
million from $3.0 million for
the six months ended March 31,
2013.
- Gross profit increased 99.8% to $0.9
million from $0.4 million for
the six months ended March 31,
2013.
- Gross margin increased to 24.2% from 14.8% for the six months
ended March 31, 2013
- Net loss decreased to approximately $0.7
million from approximately $1.8
million for the six months ended March 31, 2013.
- Basic and diluted loss per share was $0.49 for the six months ended March 31, 2014 compared to basic and diluted loss
per share of $1.29 for the six months
ended March 31, 2013. Weighted
average shares outstanding for the six months ended March 31, 2014 remained unchanged at
1,405,000.
"The Company's business is recovering gradually and the Company
also took measures to increase the profit including cutting the
headcounts to decrease the cost," said Mr. Peng Zhang, Chief Executive Officer. "Although
the overall market of software solution is not positive, the
Company still achieved the steady business growth. In the future we
will continue to take measures to improve our performance and
optimize our business model to achieve sustainable growth."
Results of Operations - For the Six Months Ended
March 31, 2014 Compared to the Six
Months Ended March 31,
2013
Net Revenues
The Company's revenues increased by 21.9% to $3.6 million for the six months ended
March 31, 2014, as compared to
$3.0 million for the six months ended
March 31, 2013.
Revenues from software solutions decreased by 10.6% to
$0.18 million in the six months
ended March 31, 2014, compared to
$0.20 million in the six months
ended March 31, 2013. As a percentage
of total revenue, software solutions sales decreased from 6.7% to
4.9%. The decrease in our software solutions revenue was mainly due
to the fact that the overall software solution market is depressed
in recent years and the Company is unable to sign the contracts for
larger value amounts in the six months ended March 31, 2014 than those signed in the six
months ended March 31,
2013. Revenues from wireless system solutions increased by
23.0% to $3.5 million in the six
months ended March 31, 2014, compared
to $2.8 million in the six months
ended March 31, 2013. As a percentage
of total revenue, wireless system solution sales increased from
93.3% to 94.1% of our total revenue. The increase in revenue from
wireless system solutions was mainly attributable to revenue
recognition from the contracts signed in earlier periods.
Cost of Sales
Cost of sales increased by 8.5% to approximately $2.8 million for the six months ended
March 31, 2014 from approximately
$2.5 million for the six months ended
March 31, 2013. As a percentage of
our total revenues, cost of sales decreased from 85.2% of our total
revenues for the six months ended March 31,
2013 to 75.8% of our total revenues for the six months ended
March 31, 2014, which partially
attributable to the fact that the projects the Company had worked
on were with old clients and therefore made our work more
efficient. The increase in cost of sales was primarily attributable
to the increase in revenue and gross margin from wireless system
solutions business.
Cost of sales for software solutions decreased by 42.3% to
approximately $0.1 million for the
six months ended March 31, 2014,
compared to approximately $0.3
million for the six months ended March 31, 2013. This represented 5.3% and 9.9% of
the total cost of sales, and 81.8% and 126.5% of software solutions
revenue, for the six months ended March 31,
2014 and 2013, respectively. Cost of sales for wireless
system solutions increased by 13.9%, from approximately
$2.3 million for the six months ended
March 31, 2013 to approximately
$2.6 million for the six months ended
March 31, 2014. This represented
94.6% and 90.1% of the total cost of sales, and 76.2% and 82.3% of
wireless system solution revenue, for the six months ended
March 31, 2014 and 2013,
respectively.
Gross Profit and Gross Margin
In the six months ended March 31,
2014, gross profit increased by 99.8% to $0.9 million from $0.4 million in the six months ended March 31, 2013. Gross margin for the six months
ended March 31, 2014 was 24.2%,
compared to 14.8% in the six months ended March 31, 2013. This increase of gross profit and
gross margin was primarily due to the revenue from Jingbian
Integration Project that was partially recognized in the six
months ended March 31, 2014.
Gross profit from software solutions increased by 161.1% for the
six months ended March 31, 2014, from
minus $0.05 million to $0.03 million, and gross margin increased to
18.2% from minus 26.5% in the six months ended March 31, 2013. Gross profit from wireless system
solutions increased by 65.2% for the six months ended March 31, 2014 from $0.5
million to $0.8 million, and
gross margin increased to 23.8% from 17.7% in the six months ended
March 31, 2013 partially attributable
to the higher margin of some of the wireless projects. In increase
in gross margins in both of our business sections above was as a
result of our strict cost control.
Operating Expenses
Total operating expenses for the six months ended March 31, 2014 were $1.6
million, compared to $2.3
million for the six months ended March 31, 2013, representing a decrease of
27.4%.
Selling and marketing expenses decreased by 10.3% to
$0.24 million in the six months
ended March 31, 2014, compared to
$0.27 million for the six months
ended March 31, 2013, and represented
6.6% and 8.9% of revenues for the six months ended March 31, 2014 and 2013, respectively. The
decrease in sales and marketing expenses was a direct result of the
Company's cost-control decision to reduce the related marketing and
traveling expenses coping with the depressing software solution
market. The lower demand for software solutions products is because
most of our clients in this business sector are government
sponsored companies. With the macro-policy in China that controls the spending budgets in
governmental agencies, less clients in such nature were inclined to
buy value-added software solutions.
General and administrative expenses were approximately
$1.3 million in the six months
ended March 31, 2014, a decrease of
22.9% from $1.7 million in the six
months ended March 31, 2013, and
represented 37.0% and 58.5% of revenues for the six months ended
March 31, 2014 and 2013,
respectively. The decrease in general and administrative expenses
was primarily due to the fact that bad debt expenses were minus
$0.09 million in the six months ended
March 31, 2014, compared to
approximately $0.5 million in the six
months ended March 31, 2013.
Research and development expenses were approximately
$0.06 million in the six months
ended March 31, 2014, a decrease of
76.39% from $0.25 million in the six
months ended March 31, 2013,
represented 1.6% and 8.4% of revenues for the six months ended
March 31, 2014 and 2013,
respectively. The decrease in research and development expenses was
mainly due to the reduction of the number of R&D staffs.
Loss from Operations
The Company had loss from operations of $0.8 million in the six months ended
March 31, 2014, compared to loss from
operations of $1.8 million in the six
months ended March 31, 2013, a
decrease of $1.1 million, or 58.1%,
primarily due to increases in revenues from wireless system
solutions compounded by a decrease in operating expenses. Operating
margins for the six months ended March 31,
2014 and 2013 were minus 21.0% and minus 61.1%,
respectively.
Net Loss and EPS
Net loss was $0.7 million during
the six months ended March 31, 2014,
compared to net loss of $1.8 million
in the six months ended March 31,
2013, a decrease of $1.1
million, or 56.9%. Net loss as a percentage of total net
revenues was minus 19.0% and minus 60.6% for the six months ended
March 31, 2014 and 2013,
respectively. Basic and diluted loss per share was $0.49 in the six months ended March 31, 2014, compared to basic and diluted
loss per share of $1.29 for the six
months ended March 31, 2013. The
number of weighted average common shares outstanding for the six
months ended March 31, 2014 remained
unchanged at 1,405,000.
Liquidity and Capital Resources
Cash and Cash Equivalents
As of March 31, 2014, the Company
had cash and cash equivalents of $5.5
million, compared to $6.1 million as of September 30, 2013, the Company's last fiscal
year end. Cash flow used in operating activities for the six months
ended March 31, 2014 was
approximately $0.6 million,
compared to approximately $1.5
million provided by operating activities for the six months
ended March 31, 2013. For the six
months ended March 31, 2014, the
Company had a net loss of $0.7
million, decreased unbilled revenue by $3.2 million, decreased other receivable and
prepayments by $1.2 million and
decreased advance from customers by $1.6
million. Cash flow provided by investing activities was
approximately $0.02 million for the
six months ended March 31, 2014,
compared to $0.1 million used in
investing activities for the six months ended March 31, 2013.
Financial Outlook
For the fiscal year ended September 30,
2014, management expects revenues of $8.7 million to $11.0 million and net loss of
$1.0 million to $1.8 million.
Conference Call
The Company will host a conference call to discuss the financial
results for the six months ended March 31,
2014 at 8:00 a.m. EDT on
June 26, 2014.
To participate in the conference call, please dial any of the
following numbers:
USA Toll Free: 877-407-9205
International: 201-612-7415
Conference ID #:13585325
A replay of the call will be available until 11:59 PM EDT on June 28,
2014.
To access the replay, please dial any of the following
numbers:
USA Toll Free: 877-660-6853
International: 201-612-7415
Replay Passcodes (both required for playback):
Conference ID #: 13585325
About Kingtone Wirelessinfo Solution Holding Ltd
Kingtone Wirelessinfo Solution Holding Ltd (Nasdaq: KONE) is
a China-based software and solutions developer focused on
wirelessly enabling businesses and government agencies to more
efficiently manage their operations. The Company's products, known
as mobile enterprise solutions, extend a company's or enterprise's
information technology systems to include mobile participants. The
Company develops and implements mobile enterprise solutions for
customers in a broad variety of sectors and industries, and
improves efficiencies by enabling information management in
wireless environments. At the core of its many diverse packaged
solutions is proprietary middleware that enables wireless
interactivity across many protocols, devices and platforms.
For more information, please visit the Company's website at
http: www.kingtoneinfo.com. The Company routinely posts
important information on its website.
Safe Harbor Statements
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995, including certain plans, expectations, goals, and
projections, which are subject to numerous assumptions, risks, and
uncertainties. These forward-looking statements may include, but
are not limited to, statements containing words such as "may,"
"could," "would," "plan," "anticipate," "believe," "estimate,"
"predict," "potential," "expects," "intends", "future" and
"guidance" or similar expressions. These forward-looking statements
speak only as of the date of this press release and are subject to
change at any time. These forward-looking statements are based upon
management's current expectations and are subject to a number of
risks, uncertainties and contingencies, many of which are beyond
the Company's control that may cause actual results, levels of
activity, performance or achievements to differ materially from any
future results, levels of activity, performance or achievements
expressed or implied by such forward-looking statements. The
Company's actual results could differ materially from those
contained in the forward-looking statements due to a number of
factors, including those described under the heading "Risk Factors"
in the Company's Annual Report for the fiscal year ended
September 30, 2013 filed with the
Securities and Exchange Commission. The Company undertakes no
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required under applicable law.
For investor and
media inquiries, please contact:
|
Yao Ti
|
Assistant to the Chief
Financial Officer
|
Tel:
+86-29-8826-6383
|
Email:
tiyao@kingtoneinfo.com
|
KINGTONE
WIRELESSINFO SOLUTION HOLDING LTD AND SUBSIDIARIES
|
CONSOLIDATED BALANCE
SHEETS
|
(Express in
thousands of U.S. Dollars, except shares and per share
data)
|
|
|
|
|
|
|
|
|
|
As of March
31,
|
|
As of September
30,
|
|
|
|
2014
|
|
2013
|
|
|
|
(Unaudited)
|
|
(Audited)
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
5,501
|
$
|
6,132
|
|
Accounts and Notes
Receivable, net of allowance
|
|
4,866
|
|
4,496
|
|
Unbilled
revenue
|
|
2,857
|
|
6,029
|
|
Due from related
companies
|
|
2,058
|
|
141
|
|
Inventories,
net
|
|
825
|
|
688
|
|
Other receivables and
prepayments
|
|
877
|
|
2,105
|
|
Total Current
Assets
|
|
16,984
|
|
19,591
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
13,015
|
|
13,358
|
|
Intangible assets,
net
|
|
620
|
|
632
|
|
Total
Assets
|
$
|
30,619
|
$
|
33,581
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
Current
liabilities
|
|
|
|
|
|
Accounts
payable
|
$
|
1,056
|
$
|
1,606
|
|
Advances from
customers
|
|
7,448
|
|
9,062
|
|
Other payables and
accruals
|
|
114
|
|
111
|
|
Taxes
payable
|
|
1,493
|
|
1,545
|
|
Amounts due to
related parties
|
|
2
|
|
2
|
|
Dividend
payable
|
|
839
|
|
842
|
|
Total Current
Liabilities
|
|
10,952
|
|
13,168
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
Ordinary share ($0.01
par value, 100,000,000 shares authorized, 1,405,000 shares issued
and
outstanding as of March 31, 2014 and September 30, 2013,
respectively)
|
|
14
|
|
14
|
|
Additional paid in
capital
|
|
22,233
|
|
22,233
|
|
Appropriated retained
earnings
|
|
1,615
|
|
1,615
|
|
Unappropriated
retained earnings
|
|
(8,339)
|
|
(7,648)
|
|
Accumulated other
comprehensive income
|
|
4,144
|
|
4,199
|
|
Total
Shareholders' Equity
|
|
19,667
|
|
20,413
|
|
Total Liabilities
and Shareholders' Equity
|
$
|
30,619
|
$
|
33,581
|
KINGTONE
WIRELESSINFO SOLUTION HOLDING LTD AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
|
|
(Express in
thousands of U.S. Dollars, except shares and per share
data)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
Ended March 31,
|
|
|
|
|
|
2014
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
Software
|
$
|
179
|
$
|
200
|
$
|
52
|
|
|
Wireless system
solution
|
|
3,459
|
|
2,784
|
|
1,127
|
|
|
|
- Related
party
|
|
-
|
|
-
|
|
31
|
|
|
|
- Third
party
|
|
3,459
|
|
2,784
|
|
1,096
|
|
|
Total
revenues
|
|
3,638
|
|
2,984
|
|
1,179
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
|
|
|
|
|
|
|
Software
|
|
146
|
|
253
|
|
363
|
|
|
Wireless system
solution
|
|
2,611
|
|
2,290
|
|
1,018
|
|
|
|
-Third
Party
|
|
2,611
|
|
2,290
|
|
1,018
|
|
|
Total cost of
sales
|
|
2,757
|
|
2,543
|
|
1,381
|
|
|
|
|
|
|
|
|
|
|
|
Gross (loss)
profit
|
|
881
|
|
441
|
|
(202)
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
Selling and marketing
expenses
|
|
239
|
|
266
|
|
434
|
|
|
General and
administrative expenses
|
|
1,347
|
|
1,747
|
|
4,351
|
|
|
Research and
development expenses
|
|
59
|
|
251
|
|
195
|
|
|
Total Operating
expenses
|
|
1,645
|
|
2,264
|
|
4,980
|
|
Loss from
operations
|
|
(764)
|
|
(1,823)
|
|
(5,182)
|
|
|
|
|
|
|
|
|
|
|
|
Other
income(expense)
|
|
|
|
|
|
|
|
|
Interest
income
|
|
19
|
|
48
|
|
57
|
|
|
Other income
(expense), net
|
|
54
|
|
(33)
|
|
(45)
|
|
|
Total other income,
net
|
|
73
|
|
15
|
|
12
|
|
Loss before income
tax expenses
|
|
(691)
|
|
(1,808)
|
|
(5,170)
|
|
|
Income tax
expenses
|
|
-
|
|
-
|
|
-
|
|
Net loss
|
|
(691)
|
|
(1,808)
|
|
(5,170)
|
|
Other comprehensive
income
|
|
|
|
|
|
|
|
|
Foreign currency
translation gain (loss)
|
|
(55)
|
|
1,185
|
|
1,223
|
|
Comprehensive
loss
|
$
|
(746)
|
$
|
(623)
|
$
|
(3,947)
|
|
|
|
|
|
|
|
|
|
|
|
Loss per ordinary
share:
|
|
|
|
|
|
|
|
|
Basic and
Diluted
|
$
|
(0.49)
|
$
|
(1.29)
|
$
|
(3.70)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of ordinary shares outstanding Basic and Diluted
|
|
|
|
|
|
|
|
|
|
|
|
1,405,000
|
|
1,405,000
|
|
1,405,000
|
|
KINGTONE
WIRELESSINFO SOLUTION HOLDING LTD AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
(Express in
thousands of U.S. Dollars, except shares and per share
data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
Ended March 31,
|
|
|
|
2014
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities
|
|
|
|
|
|
|
Net
loss
|
$
|
(691)
|
$
|
(1,808)
|
$
|
(5,170)
|
|
Depreciation and
amortization
|
|
287
|
|
308
|
|
291
|
|
Bad debt
expense
|
|
(93)
|
|
515
|
|
3,281
|
|
Share-based
compensation expense
|
|
-
|
|
1
|
|
2
|
Changes in operating
assets and liabilities
|
|
|
|
|
|
|
|
Accounts and notes
receivable
|
|
(294)
|
|
(582)
|
|
522
|
|
Unbilled
revenue
|
|
3,174
|
|
219
|
|
141
|
|
Other receivables and
prepayments
|
|
1,230
|
|
(711)
|
|
(890)
|
|
Inventories
|
|
(140)
|
|
(286)
|
|
(73)
|
|
Taxs
payable
|
|
(47)
|
|
(64)
|
|
(55)
|
|
Accounts
payable
|
|
(548)
|
|
140
|
|
20
|
|
Advance from
customers
|
|
(1,597)
|
|
3,866
|
|
626
|
|
Other payables and
accruals
|
|
4
|
|
(68)
|
|
(112)
|
|
Net investment in
sales-type leases
|
|
-
|
|
(25)
|
|
(39)
|
|
Due from related
party
|
|
(1,929)
|
|
-
|
|
-
|
Net cash (used in)
provided by operating activities
|
|
(644)
|
|
1,505
|
|
(1,456)
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
Payment to purchase
property and equipments
|
|
(8)
|
|
(14)
|
|
(82)
|
|
Proceeds from
disposal of office equipment
|
|
32
|
|
-
|
|
1
|
|
Proceeds from
collection of due from related companies
|
|
-
|
|
124
|
|
-
|
Net cash (used in)
provided by investing activities
|
|
24
|
|
110
|
|
(81)
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
|
Proceeds from
short-term loans due to related companies
|
|
-
|
|
69
|
|
-
|
Net cash (used in)
provided by financing activities
|
|
-
|
|
69
|
|
-
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(11)
|
|
12
|
|
201
|
|
|
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
(631)
|
|
1,696
|
|
(1,336)
|
|
Cash and cash
equivalents at beginning of year
|
|
6,132
|
|
6,439
|
|
8,749
|
|
Cash and cash
equivalents at end of year
|
$
|
5,501
|
$
|
8,135
|
$
|
7,413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information
|
|
|
|
|
|
|
|
Interest
paid
|
$
|
-
|
$
|
-
|
$
|
-
|
|
Income taxes
paid
|
$
|
-
|
$
|
-
|
$
|
-
|
SOURCE Kingtone Wirelessinfo Solution Holding Ltd