XI'AN, China, July 10, 2015 /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 the financial results for the six months ended
March 31, 2015. 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, 2015:
Revenues increased 132.9% to
$8.5 million from $3.6 million for the six months ended
March 31, 2014;
Gross profit increased 395.7% to
$4.4 million from $0.9 million for the six months ended
March 31, 2014;
Gross margin increased to 51.5%
from 24.2% for the six months ended March
31, 2014;
Net income increased to
$2.6 million from Net loss of
$0.7 million for the six months ended
March 31, 2014.
Basic and diluted income per share
was $1.87 for the six months ended
March 31, 2015 compared to basic and
diluted loss per share of $0.49 for
the six months ended March 31, 2014.
Weighted average shares outstanding for the six months ended
March 31, 2015 remained unchanged at
1,405,000.
Mr. Peng Zhang, Chief Executive
Officer of the Company, stated, "We are very pleased with our
performance on business operation, which generated $2.6 million net income in the first six months
ended March 31, 2015." He concluded,
" Looking forward, we expect revenue of $12.0 million to $15.0 million, and net income of
$0.5 million to $1.0 million for the
fiscal year 2015. We are confident in accomplishing our goals at
the end of fiscal year 2015."
Results of Operations - For the Six Months Ended
March 31, 2015 Compared to the Six
Months Ended March 31,
2014
Net Revenues
The Company's revenues increased by 132.9% to $8.5 million for the six months ended
March 31, 2015, as compared to
$3.6 million for the six months ended
March 31, 2014.
Revenues from software solutions decreased by 75.4% to
$0.04 million in the six months
ended March 31, 2015, compared to
$0.18 million in the six months
ended March 31, 2014. As a percentage
of total revenue, software solutions sales decreased from 4.9% to
0.5%. The decrease in our software solutions revenue was mainly due
to the fact that the overall software solution market depressed in
recent years and the Company is unable to sign contracts for larger
value amounts in the six months ended March
31, 2015, compared to the same period last year.
Revenues from wireless system solutions increased by 143.7% to
$8.4 million in the six months ended
March 31, 2015, compared to
$3.5 million in the six months ended
March 31, 2014. As a percentage of
total revenue, wireless system solution sales increased from 95.1%
to 99.5% of our total revenue. The increase in revenue from
wireless system solutions was mainly attributable to the revenue of
Jingbian integration project which increased to $5.7 million in the six months ended March 31, 2015, compared to $2.4 million in the six months ended March 31, 2014 and Ningxia Bao Ta project which
recorded revenue of $1 million
compared to $0 million in the six
months ended March 31, 2014.
Jingbian integration project:
On September 15, 2012, the Company
entered into an agreement with Hualu Engineering & Technology
Co., Ltd. ("Hualu") to provide wireless system service to Hualu's
coal chemical factory in Jingbian Energy and Chemical Projects and
Comprehensive Utilization of Industrial Park in Shaanxi, China ("Jinbian Industrial Park").
Hualu, a state-owned enterprise in China, is dedicated to all round engineering
construction services. The services that shall be performed under
this contract include installation, debugging and providing initial
trainings to staff operating tanks, engineering instruments and
telecommunications. Additionally, on September 24, 2014, the Company entered into a
supplemental agreement with Hualu for equipment purchasing. The
project with Hualu contributed RMB 35
million, or approximately $5.7
million revenue to the Company in the first six months of
fiscal 2015. This project had been completed on December 31, 2014.
Ningxia Bao Ta project:
On April 27, 2013, the Company
entered into an agreement with Ningxia Baota Dagu Transport &
Warehouse Co., Ltd ("Ningxia Bao Ta") to provide wireless system
service to Ningxia Bao Ta's crude-oil reserve warehouse in Ningdong
Energy and Chemical Industry Base of Ningxia, China (Ningdong Base). According to the
agreement, the Company shall provide engineering services to
Ningxia Bao Ta's crude-oil reserve warehouse which include
installation, debugging and providing initial trainings to staff
operating tanks, engineering instruments and telecommunications.
The total revenue we expect to be generated from this project is
$1.6 million. This project started in
April 2014 and is still in process.
It contributed RMB 6 million, or
approximately $1 million revenue to
the Company in the first six months of fiscal 2015.
Cost of Sales
Cost of sales increased by 49.0% to approximately $4.1 million for the six months ended
March 31, 2015 from approximately
$2.8 million for the six months ended
March 31, 2014. The increase in
cost of sales was primarily in line with the increase in revenue
from wireless system solutions business. As a percentage of our
total revenues, cost of sales decreased from 75.8% of our total
revenues for the six months ended March 31,
2014 to 48.5% of our total revenues for the six months ended
March 31, 2015, which was mainly
attributable to the fact that the projects the Company had worked
on were with existing clients and therefore made its work more
efficient.
Cost of sales for software solutions decreased by 87.0% to
approximately $0.02 million for the
six months ended March 31, 2015,
compared to approximately $0.1
million for the six months ended March 31, 2014. This represented 0.5% and 5.3% of
the total cost of sales, and 43.2% and 81.6% of software solutions
revenue, for the six months ended March 31,
2015 and 2014, respectively. The decrease in the percentage
of cost of sales for software solutions was mainly due to the
decrease in revenue and increase in gross margin.
Cost of sales for wireless system solutions increased by 56.6%,
from approximately $2.6 million for
the six months ended March 31, 2014
to approximately $4.1 million for the
six months ended March 31, 2015. This
represented 99.5% and 94.7% of the total cost of sales, and 48.5%
and 75.5% of wireless system solution revenue, for the six months
ended March 31, 2015 and 2014,
respectively.
Gross Profit and Gross Margin
In the six months ended March 31,
2015, gross profit increased by 395.7% to $4.4 million from $0.9 million in the six months ended March 31, 2014. Gross margin for the six months
ended March 31, 2015 was 51.5%,
compared to 24.2% in the six months ended March 31, 2014. This increase of gross profit and
gross margin was primarily due to the increase in gross profit and
gross margin from Jingbian integration project that was partially
recognized in the six months ended March 31, 2015.
Gross profit from software solutions decreased by 24.2% for the
six months ended March 31, 2015, from
$0.03 million to $0.02 million, and gross margin increased to
56.8% from 18.4% in the six months ended March 31, 2014. Gross profit from wireless system
solutions increased by 412.0% for the six months ended March 31, 2015 from $0.8
million to $4.3 million, and
gross margin increased to 51.5% from 24.5% in the six months ended
March 31, 2014 which was partially
attributable to the higher margin of some of the wireless
projects. The increase in gross margins in both business
sections above was due to the higher gross margin projects and
smaller up-front investments with existing customers comparing to
the same period last year.
Operating Expenses
Total operating expenses for the six months ended March 31, 2015 were $3.4
million, compared to $1.6
million for the six months ended March 31, 2014, representing an increase of
107.4%.
Selling expenses decreased by 58.6% to $0.1 million in the six months ended
March 31, 2015, compared to
$0.24 million for the six months
ended March 31, 2014, and represented
1.2% and 6.6% of revenues for the six months ended March 31, 2015 and 2014, respectively. The
decrease in sales 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
demand for software solutions products is lower 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
$3.1 million in the six months
ended March 31, 2015, an increase of
133.1% from $1.3 million in the six
months ended March 31, 2014, which
represented 37.1% and 37.0% of revenues for the six months ended
March 31, 2015 and 2014,
respectively. The increase in general and administrative expenses
was primarily due to the bad debt expenses. The bad debt expenses
increased to $1.6 million for the six
months ended March 31, 2015 from
minus $0.1 million for the same
period last year, a result of the Company accrued bad debt expenses
for accounts receivable aged over the past three years.
Research and development expenses were approximately
$0.17 million in the six months
ended March 31, 2015, an increase of
191.5% from $0.06 million in the six
months ended March 31, 2014, which
represented 2.0% and 1.6% of revenues for the six months ended
March 31, 2015 and 2014,
respectively. The increase in research and development expense was
mainly due to the increased investment in research and development
department to better adopt to the marketing competition, together
with the increased labor costs.
Income (Loss) from Operations
The Company had operations income of $1.0 million in the six months ended
March 31, 2015, compared to loss from
operations of $0.8 million in the six
months ended March 31, 2014, an
increase of $1.7 million, or 225.1%,
which primarily due to the significantly higher revenue and gross
profit from wireless system solutions business.
Other Income
Other income increased to approximately $1.7 million in the six months ended March 31, 2015 from approximately $0.07 million in the six months ended
March 31, 2014. The increase in other
income was largely due to the rental income. On October 28, 2013, the Company signed a
twenty-year lease agreement with Xi'an Zhongde Orthopedics Hospital
Co., Ltd. ("Zhongde"). According the lease agreement, the Company
shall lease "Kingtone Center", an approximately 20,000 square-meter
six-story warehouse and industrial facility in Xi'an which was purchased in April 2008, to Zhongde with a monthly rent of
approximately $0.1 million from
July 1, 2014 till December 31, 2034. The rent has an incremental 2
percent increase year over year during the next following years
which caused the difference in other income.
Net income (Loss) and EPS
Net income was $2.6 million in the
six months ended March 31, 2015,
compared to net loss of $0.7 million
in the six months ended March 31,
2014, an increase of $3.3
million, or 480.8%. Basic and diluted income per share was
$1.87 in the six months ended
March 31, 2015, compared to basic and
diluted loss per share of $0.49 for
the six months ended March 31, 2014.
The number of weighted average common shares outstanding for the
six months ended March 31, 2015
remained unchanged at 1,405,000.
Liquidity and Capital Resources
Cash and Cash Equivalents
As of March 31, 2015, the Company
had cash and cash equivalents of $1.9
million, compared to $4.2 million as of September 30, 2014, the Company's last fiscal
year end.
As of March 31, 2015, the Company
had accounts receivable of $5.6
million, compared to $4.8
million as of September 30,
2014, the Company's last fiscal year end. The increase of
$0.8 million, or 16.5%, is mainly
caused by certain revenue from Hualu and other clients recognized
during the last six months.
Net cash provided by operating activities for the six months
ended March 31, 2015 was
approximately $2.1 million,
compared to approximately $1.3
million for the six months ended March 31, 2014. For the six months ended
March 31, 2015, the Company had a net
income of $2.6 million and
depreciation and amortization of $0.3
million.
Net cash used in financing activities for the six months ended
March 31, 2015 was approximately
$4.5 million, compared to
approximately $1.9 million for the
six months ended March 31, 2014. For
the six months ended March 31, 2015,
the Company had a $4.4 million loan
to Xi'an Xinrong Engineering and Industry (Group) Co., Ltd, which
was indirectly owned and controlled by Tao Li, Chairman of the
Company, for its normal business operations, as previously
disclosed .
Net cash provided by investing activities was approximately
$4,000 for the six months ended
March 31, 2015, compared to
$24,000 used in investing activities
for the six months ended March 31,
2014.
Financial Outlook
For the fiscal year ended September 30,
2015, management expects revenues of $12.0 million to $15.0 million and net income of
$0.5 million to $1.0 million.
Conference Call
The Company will host a conference call to discuss the financial
results for the six months ended March 31,
2015 at 8:00 a.m. EDT on
July 10, 2015.
To participate in the conference call, please dial any of the
following numbers:
USA Toll Free: 877-407-9205
International: 201-689-8054
Conference ID #:13614012
A replay of the call will be available until 11:59 PM EDT on July 12,
2015.
To access the replay, please dial any of the following
numbers:
USA Toll Free: 877-660-6853
International: 201-612-7415
Conference ID #: 13614012
The conference call will be webcast live by Vcall and can be
accessed at
http://www.investorcalendar.com/IC/CEPage.asp?ID=174146.
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, 2014 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:
|
Mr. Wang
Fang
|
Assistant to the Chief
Financial Officer
|
Tel:
+86-29-8826-6383
|
Email:
wangfang@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,
|
|
|
|
2015
|
|
2014
|
|
|
|
(Unaudited)
|
|
(Audited)
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,859
|
$
|
4,166
|
|
Accounts and Notes
Receivable, net of allowance
|
5,603
|
|
4,810
|
|
Unbilled
revenue
|
|
-
|
|
4,975
|
|
Due from related
companies
|
|
6,694
|
|
2,216
|
|
Inventories,
net
|
|
136
|
|
2,142
|
|
Other receivables and
prepayments
|
|
518
|
|
1,084
|
|
Total Current
Assets
|
|
14,810
|
|
19,393
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
12,655
|
|
12,890
|
|
Intangible assets,
net
|
|
594
|
|
611
|
|
Total
Assets
|
$
|
28,059
|
$
|
32,894
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
Current
liabilities
|
|
|
|
|
|
Accounts
payable
|
$
|
2,308
|
$
|
1,867
|
|
Advances from
customers
|
|
400
|
|
8,365
|
|
Other payables and
accruals
|
|
176
|
|
171
|
|
Taxes
payable
|
|
1,219
|
|
1,273
|
|
Amounts due to
related parties
|
|
-
|
|
2
|
|
Dividend
payable
|
|
845
|
|
840
|
|
Total Current
Liabilities
|
|
4,948
|
|
12,518
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
Ordinary share ($0.01
par value, 100,000,000
shares authorized, 1,405,000 shares issued and
outstanding as of March 31, 2015 and September
30, 2014, respectively)
|
|
14
|
|
14
|
|
Additional paid in
capital
|
|
22,233
|
|
22,233
|
|
Appropriated retained
earnings
|
|
1,615
|
|
1,615
|
|
Unappropriated
retained earnings
|
|
(5,017)
|
|
(7,649)
|
|
Accumulated other
comprehensive income
|
|
4,266
|
|
4,163
|
|
Total
Shareholders' Equity
|
|
23,111
|
|
20,376
|
|
Total Liabilities
and Shareholders' Equity
|
$
|
28,059
|
$
|
32,894
|
KINGTONE
WIRELESSINFO SOLUTION HOLDING LTD AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
|
(Express in
thousands of U.S. Dollars, except shares and per share
data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
Ended March 31,
|
|
|
|
|
2015
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
Software - Third
party
|
$
|
44
|
$
|
179
|
$
|
200
|
|
Wireless system
solution - Third party
|
|
8,430
|
|
3,459
|
|
2,784
|
|
Total
revenues
|
|
8,474
|
|
3,638
|
|
2,984
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
|
|
|
|
|
|
Software - Third
party
|
|
19
|
|
146
|
|
253
|
|
Wireless system
solution - Third party
|
|
4,088
|
|
2,611
|
|
2,290
|
|
Total cost of
sales
|
|
4,107
|
|
2,757
|
|
2,543
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
4,367
|
|
881
|
|
441
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Selling and marketing
expenses
|
|
99
|
|
239
|
|
266
|
|
General and
administrative expenses
|
|
3,140
|
|
1,347
|
|
1,747
|
|
Research and
development expenses
|
|
172
|
|
59
|
|
251
|
|
Total Operating
expenses
|
|
3,411
|
|
1,645
|
|
2,264
|
Income (Loss) from
operations
|
|
956
|
|
(764)
|
|
(1,823)
|
|
|
|
|
|
|
|
|
|
Other
income(expense)
|
|
|
|
|
|
|
|
Interest
income
|
|
22
|
|
19
|
|
48
|
|
Other income
(expense), net
|
|
1,653
|
|
54
|
|
(33)
|
|
|
Related
Party
|
|
24
|
|
-
|
|
-
|
|
|
Third
party
|
|
1,630
|
|
54
|
|
-
|
|
Total other income,
net
|
|
1,675
|
|
73
|
|
15
|
Income (Loss) before
income tax expenses
|
|
2,631
|
|
(691)
|
|
(1,808)
|
|
Income tax
expenses
|
|
-
|
|
-
|
|
-
|
Net Income
(loss)
|
|
2,631
|
|
(691)
|
|
(1,808)
|
Other comprehensive
income
|
|
|
|
|
|
|
|
Foreign currency
translation gain (loss)
|
|
105
|
|
(55)
|
|
1,185
|
Comprehensive income
(loss)
|
$
|
2,736
|
$
|
(746)
|
$
|
(623)
|
|
|
|
|
|
|
|
|
|
Earning (Loss) per
ordinary share:
|
|
|
|
|
|
|
|
Basic and
Diluted
|
$
|
1.87
|
$
|
(0.49)
|
$
|
(1.29)
|
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,
|
|
|
|
2015
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities
|
|
|
|
|
|
|
Netincome(loss)
|
$
|
2,631
|
$
|
(691)
|
$
|
(1,808)
|
|
Depreciation and
amortization
|
|
321
|
|
287
|
|
308
|
|
Bad debt
expense
|
|
1,635
|
|
(93)
|
|
515
|
|
Share-based
compensation expense
|
|
-
|
|
-
|
|
1
|
Changes in operating
assets and liabilities
|
|
|
|
|
|
|
|
Accounts and notes
receivable
|
|
(2,398)
|
|
(294)
|
|
(582)
|
|
Unbilled
revenue
|
|
4,986
|
|
3,174
|
|
219
|
|
Other receivables and
prepayments
|
|
570
|
|
1,230
|
|
(711)
|
|
Inventories
|
|
2,011
|
|
(140)
|
|
(286)
|
|
Taxes payable
|
|
(61)
|
|
(47)
|
|
(64)
|
|
Accounts
payable
|
|
429
|
|
(548)
|
|
140
|
|
Advance from
customers
|
|
(7,984)
|
|
(1,597)
|
|
3,866
|
|
Other payables and
accruals
|
|
5
|
|
4
|
|
(68)
|
|
Net investment in
sales-type leases
|
|
-
|
|
-
|
|
(25)
|
Net cash provided
by operating activities
|
|
2,145
|
|
1,285
|
|
1,505
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
Payment to purchase
property and equipments
|
|
(23)
|
|
(8)
|
|
(14)
|
|
Proceeds from
disposal of office equipment
|
|
27
|
|
32
|
|
-
|
|
Proceeds from
collection of due from related companies
|
-
|
|
-
|
|
124
|
Net cash provided
by investing activities
|
|
4
|
|
24
|
|
110
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
|
Proceeds from related
companies
|
|
-
|
|
-
|
|
69
|
|
Payment to related
companies
|
|
(4,450)
|
|
(1,929)
|
|
-
|
Net cash (used in)
provided by financing activities
|
|
(4,450)
|
|
(1,929)
|
|
69
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(6)
|
|
(11)
|
|
12
|
|
|
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
(2,307)
|
|
(631)
|
|
1,696
|
|
Cash and cash
equivalents at beginning of year
|
|
4,166
|
|
6,132
|
|
6,439
|
|
Cash and cash
equivalents at end of year
|
$
|
1,859
|
$
|
5,501
|
$
|
8,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information
|
|
|
|
|
|
|
|
Interest
paid
|
$
|
-
|
$
|
-
|
$
|
-
|
|
Income taxes
paid
|
$
|
-
|
$
|
-
|
$
|
-
|
|
|
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/kingtone-wirelessinfo-solution-holding-ltd-reports-the-first-six-months-of-fiscal-year-2015-unaudited-financial-results-confirms-its-previously-announced-fiscal-year-2015-revenue-and-net-income-guidance-300111538.html
SOURCE Kingtone Wirelessinfo Solution Holding Ltd.