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Kingtone Wirelessinfo Solution Holding Ltd Reports Fiscal Year 2012 Financial Results; Provides Fiscal Year 2013 Revenue and Net

Kingtone Wirelessinfo Solution Holding Ltd Reports Fiscal Year 2012 Financial
      Results; Provides Fiscal Year 2013 Revenue and Net Income Guidance

FY12 Revenues Down 77.1% to $1.5 million from $6.3 million in the Prior Year

FY12 Gross Profit Down 108.1% to $0.2 million loss from $2.9 million in the
Prior Year

FY12 Basic and Diluted Loss Per Share Down to $6.40* from $0.74* in the Prior
Year

PR Newswire

XI'AN, China, Jan. 18, 2013

XI'AN, China, Jan. 18, 2013 /PRNewswire/ -- Kingtone Wirelessinfo Solution
Holding Ltd (Nasdaq: KONE - News) ("Kingtone", or the "Company"), a
China-based developer and provider of mobile enterprise solutions, today
announced financial results for its fiscal year ended September 30, 2012. 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").

Fiscal Year 2012 Financial Highlights

  oRevenues decreased by 77.1% to approximately $1.5 million from
    approximately $6.3 million in the prior year period.
  oGross profit decreased by 108.1% to approximately $0.2 million loss from
    approximately $2.9 million in the prior year period.
  oGross margin decreased to minus 16.4% from 46.2% in the prior year period.
  oNet loss of approximately $9.0 million as compared to net loss of
    approximately $1.0 million in the prior year period.
  oBasic and diluted loss per share were $6.40* as compared to loss per share
    of $0.74* in the prior year period with weighted average shares
    outstanding of 1,405,000* as compared to 1,405,000* in the prior year
    period.

* Effective November 6, 2012, the Company undertook a 1-for-10 reverse stock
split of its ordinary shares then issued (the "Reverse Split"). The numbers
herein reflected the effect from the Reverse Split.

"We had a difficult fiscal year as the macro economy in China was slowing
down, and overall gross profit for the software solution business became very
slim," said Mr. Peng Zhang, Chief Executive Officer of the Company. "We
believe that this situation may be temporary and hope our investors can be
more patient with our business and capital market performance. In the
meantime, we have taken a number of measures to improve our performance and
strengthen our business model to achieve sustainable growth. We won a
substantial contract 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. It is expected to contribute RMB108.6
million or approximately $17.2 million revenue to the Company in the fiscal
year of 2013. We believe this Contract will be a great addition to the
Company's revenue in the coming year."

Fiscal Year 2012Financial Performance

Results of Operations - The year ended September 30, 2012 compared to the year
ended September 30, 2011.

Revenues. For the year ended September 30, 2012, total revenues decreased by
77.1% to approximately $1.5 million from approximately $6.3 million in the
year ended September 30, 2011.

Our revenue from software solution sales decreased by 88.6% to approximately
$0.3 million in the year ended September 30, 2012 from approximately $2.4
million in the year ended September 30, 2011. As a percentage of total
revenue, software solution sales decreased from 38.0% to 19.0%. The
significant decrease in our software solution revenue was mainly because as
the macro economy is slowing down, the governments are more conservative on
the investment on the software solution, especially mobile enterprise software
for some vertical industries such as police and emergency agency, who are our
major customers. Another contributing factor was that our new contracts were
of substantially smaller value than our contracts in the prior year period.

Our revenue from wireless system solution sales decreased by 70.1% to
approximately $1.2 million in the year ended September 30, 2012 from
approximately $3.9 million in the year ended September 30, 2011. As a
percentage of total revenue, wireless system solution revenue increased from
62.0% to 81.0% of our total revenue. Given the competitive circumstances, we
devoted more resources into communicating with some major customers but we
didn't successfully sign a contract until September 15, 2012 when we signed a
contract 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"). Pursuant to the agreement, we will
provide engineering services to Hualu's coal chemical factory in Jingbian
Industrial Park. The services to be performed under this contract include
installation, debugging and initial training the staff operating the tank,
engineering instruments and telecommunications. It is expected to contribute
RMB108.6 million, or approximately $17.2 million revenue to the company during
the fiscal year of 2013.

Cost of Sales. Cost of sales decreased by 50.4% to approximately $1.7 million
in the year ended September 30, 2012 from approximately $3.4 million in the
year ended September 30, 2011. As a percentage of our total revenues, our cost
of sales increased to 116.4% of revenues in the year ended September 30, 2012
from 53.8% of our total revenues in the year ended September 30, 2011. The
decrease in cost of sales was primarily attributable to the decrease in
revenue from both software business and wireless system solutions business.

Cost of sales for software decreased by 46.9% to approximately $0.6 million in
the year ended September 30, 2012 from approximately $1.2 million in the year
ended September 30, 2011, representing 37.9% and 35.4% of our total cost of
sales and 232.7% and 50.0% of our software revenue in the fiscal years ended
September 30, 2012 and 2011, respectively. Cost of sales for wireless system
solutions decreased by 52.4% to approximately $1.0 million in the year ended
September 30, 2012 from approximately $2.2 million in the year ended September
30, 2011, representing 62.1% and 64.6% of total cost of sales and 89.2% and
56.1% of wireless system solution revenues in the fiscal years ended September
2012 and 2011, respectively. The decreased percentage of cost of sales to
total cost of sales was attributable to the decreased revenue from wireless
system solutions, which was brought by the small and limited orders of
wireless system solutions and harsh competition of the wireless industry. The
increased percentage of cost of sales to wireless system solution revenues
from September 30, 2011 to September 30, 2012 was due to the higher weighted
average decrease of corresponding revenue from September 30, 2011 to September
30, 2012 as a result of harsh competition of the wireless industry and
economic slow-down effect.

Gross Profit and Gross Margin. Total gross profit decreased by 108.1% to
approximately $0.2 million loss in the year ended September 30, 2012 from
approximately $2.9 million in the year ended September 30, 2011. Our total
gross margin was minus 16.4% and 46.2% in the years ended September 30, 2012
and 2011, respectively. This decrease of gross profit and gross margin was
primarily due to the national slow-down economy, which resulted in the overall
of decrease of decrease in industry profit and profit margin.

Our gross profit for software solution sales decreased by 130.3% to
approximately $0.4 million loss in the year ended September 30, 2012 from
approximately $1.2 million in the year ended September 30, 2011. Our gross
margin for software solutions sales decreased to minus 132.7% in the year
ended September 30, 2012 from 50.0% in the year ended September 30, 2011.

Our gross profit for wireless system solution sales decreased by 92.6% to
approximately $0.1 million in the year ended September 30, 2012 from
approximately $1.7 million in the year ended September 30, 2011. Our gross
margin for wireless system solution sales decreased to 10.8% in the year ended
September 30, 2012 from 43.9% in the year ended September 30, 2011.

(Loss) Income from Operations. We incurred a loss of $9.4 million in the year
ended September 30, 2012, 630.5% increase in such a loss from approximately
loss of $1.3 million in the year ended September 30, 2011. The increase in
loss from operations was mainly due to significantly lower revenues from
software solutions and wireless system solutions business compounded by
increased operating expenses.

Net (Loss) Income and EPS. We incurred a net loss of $9.0 million in the year
ended September 30, 2012 as compared to net loss of approximately $1.0 million
in the year ended September 30, 2011, representing a decrease of 766.8%. Basic
and diluted loss per share was $6.40 in the year ended September 30, 2012,
compared to loss per share $0.74 in the prior year period. The number of
weighted average ordinary shares outstanding for the year ended September 30,
2012 was 1,405,000, compared to 1,405,000 a year ago. The numbers in loss per
share in both years retrospectively reflect the effect of the Reverse Split.

Liquidity and Capital Resources.

Cash and Cash Equivalents. As of September 30, 2012, the Company had cash and
cash equivalents of $6.4 million, compared to $8.7 million in the prior year
period.

Net cash used in operating activities was approximately $2.4 million for the
year ended September 30, 2012 as compared to $5.1 million for the year ended
September 30, 2011.During 2012, the Company had a net loss of $9.0 million,
out of which $0.5 million was depreciation and amortization and $4.9 million
was bad debt expense. In addition, the Company had net investment in
sales-type leases of $0.07 million, decreased accounts and notes receivable by
$1.2 million, increased unbilled revenue by $0.4 million and decreased income
tax payable by $0.1 million. Net cash provided by operating activities was
approximately $4.3 million for the year ended September 30, 2010.

Net cash used in investing activities for the year ended September 30, 2012
was approximately $0.1 million as compared to approximately $0.08 million for
the year ended September 30, 2011. The cash used in investing activities in
fiscal year 2012 and 2011 were mainly attributable to purchasing property and
equipment.Net cash used in investing activities for the year ended September
30, 2010 was approximately $0.31 million for the purpose of purchasing a
building for the Company's research and development center.

Net cash used in financing activities for the year ended September 30, 2012
totaled approximately $9 thousand as compared to net cash used in financing
activities of approximately $1.19 million for the year ended September 30,
2011.The cash used in financing activities for the year ended September 30,
2011 was mainly attributable to a loan and guarantee agreement with an
unrelated third party, and a $4.2 million guarantee for a $3 million (RMB27.9
million) loan offshore to cover oversea expenses. The cash provided by
financing activities for the year ended September 30, 2010 was mainly
attributable to the proceeds we received from our initial public offering in
May 2010.

Financial Outlook.

For the fiscal year ending September 30, 2013, management expects revenues of
$8.7 million to $11.0 million and net income of $0.6 million to $0.9 million.

Conference Call

The Company will host a conference call to discuss its fiscal year 2012
financial results at 8:00 a.m. ET on Friday, January 18, 2013. Mr. Tao Li,
Chairman, Mr. Peng Zhang, Chief Executive Officer, Ms. Li Wu, Chief Financial
Officer and Ms. Yao Ti, Assistant to the Chief Financial Officer, will be on
the call.

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 #: 407415

A replay of the call will be available until 11:59 PM ET on Jan. 19, 2013.

To access the replay, please dial any of the following numbers:

USA Toll Free: 877-660-6853
International: 201-612-7415

The conference call will be webcast live by Vcall and can be accessed at
http://www.InvestorCalendar.com.

About Kingtone Wirelessinfo Solution Holding Ltd

Kingtone Wirelessinfo Solution Holding Ltd (Nasdaq:KONE-News) is
aChina-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, to
improve 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 Kingtone'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, 2012
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:
Chief Financial Officer Assistant
Yao Ti
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 September 30,
                                                           2012        2011
ASSETS
Cash and cash equivalents                                $ 6,439    $  8,749
Accounts and Notes Receivable, net of allowance            3,240       9,418
Unbilled revenue                                           580         169
Due from related companies                                 123         118
Inventories, net                                           628         230
Other receivables and prepayments                          1,772       1,057
Current portion of net investment in sales-type leases     1,210       724
Current portion of long-term other receivalbe              1,393       -
Total Current Assets                                       15,385      20,465
Property and Equipment, net                                13,541      13,482
Intangible assets                                          633         629
Long-term other receivables                                -           1,247
Net investment in sales-type leases, less current          333         696
portion
Total Assets                                             $ 29,892   $  36,519
 LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable                                         $ 775      $  942
Advances from customers                                    1,528       368
Other payables and accruals                                167         155
Taxes payable                                              1,673       1,542
Amounts due to related parties                             2           2
Dividend payable                                           817         788
Total Current Liabilities                                  4,962       3,797
Commitments and contingencies
Ordinary share ($0.01 par value, 100,000,000 shares
authorized, 1,405,000 shares issued and outstanding as   $ 14       $  14
of September 30, 2012 and 2011, respectively)
Additional paid in capital                                 22,233      22,231
Appropriated retained earnings                             1,615       1,615
Unappropriated retained earnings                           (2,515)     6,473
Accumulated other comprehensive income                     3,583       2,389
Total Stockholders' Equity                                 24,930      32,722
Total Liabilities and Stockholders' Equity               $ 29,892   $  36,519



KINGTONE WIRELESSINFO SOLUTION HOLDING LTD AND SUBSIDIARIES
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
(Express in thousands of U.S. Dollars, except shares and per share data)
                                   For the years ended September 30,
                                   2012            2011            2010
                                                                   (see note
                                                                   below)
Revenues
      Software                $    275         $   2,409       $   11,272
      Wireless system              1,176           3,928           3,234
      solution
      - Related party              -               131             -
      -Third Party                 1,176           3,797           3,234
      Total revenues               1,451           6,337           14,506
Cost of sales
      Software                     640             1,205           903
      Wireless system              1,049           2,203           1,449
      solution
      Total cost of sales          1,689           3,408           2,352
Gross (loss) profit                (238)           2,929           12,154
Operating expenses
      Selling and marketing        685             629             341
      expenses
      General and                  8,278           3,276           1,635
      administrative expenses
      Research and                 201             311             179
      development expenses
      Total Operating              9,164           4,216           2,155
      expenses
(Loss) Income from operations      (9,402)         (1,287)         9,999
Other income(expense)
      Subsidy income               237             -               44
      Interest expense             -               -               (218)
      Interest income              117             162             -
      Other income (expense),      60              120             20
      net
      Total other income           414             282             (154)
      (expense), net
(Loss) Income before income        (8,988)         (1,005)         9,845
tax expenses
      Income tax expenses          -               32              1,608
Net (loss) income             $    (8,988)     $   (1,037)     $   8,237
Other comprehensive income
      Foreign currency             1,194           676             598
      translation gain
Comprehensive (loss) income   $    (7,794)     $   (361)       $   8,835
(Loss) Earnings per ordinary
share:
      Basic and Diluted       $    (6.40)      $   (0.74)      $   7.15
Weighted average number of
ordinary shares outstanding
      Basic and Diluted            1,405,000       1,405,000       1,152,747
Note: In March 2010, the Company changed its fiscal year-end from November
30th to September 30th, so that it would have the same fiscal year end as its
VIE, Xi'an Kingtone Information Technology Co., Ltd. ("Kingtone Information").
Accordingly, the Company is presenting its consolidated and combined
statements of operations and comprehensive income (loss) and cash flow for the
years ended September 30, 2011 and 2010.



KINGTONE WIRELESSINFO SOLUTION HOLDING LTD AND SUBSIDIARIES
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
(Express in thousands of U.S. Dollars, except shares and per share data)
                                      For the years ended September 30,
                                      2012            2011         2010
                                                                   (see
                                                                   notebelow)
Cash flows from operating
activities
Net (loss) income                 $   (8,988)    $    (1,037)   $  8,237
     Depreciation and                 548             530          225
     amortization
     Disposal of fixed assets         -               3            -
     Bad Debt expense                 4,942           402          -
     Employee compensation            873             -            -
     Share-based compensation         2               316          302
     expense
Changes in operating assets and
liabilities
     Accounts and notes               1,576           (3,004)      (4,170)
     receivable
     Unbilled revenue                 (405)           818          (778)
     Other receivables and            (1,549)         (278)        257
     prepayments
     Inventories                      (390)           161          (249)
     Tax payable                      76              (1,934)      2,756
     Accounts payable                 (201)           351          (848)
     Advance from customers           1,146           (12)         (1,037)
     Other payables and accruals      9               (13)         (394)
     Net investment in sales-type     (71)            (1,407)      -
     leases
Net cash (used in) provided by        (2,433)         (5,104)      4,301
operating activities
Cash flows from investing
activities
     Payment to purchase property     (97)            (75)         (308)
     and equipments
     Proceeds from disposal of        -               -            -
     office equipment
Net cash used in investing            (97)            (75)         (308)
activities
Cash flows from financing
activities
     Repayment of short-term bank     -               -            (3,446)
     loan
     Collection/(Payment) in
     amounts due from                 -               5            (118)
     related-party companies
     Proceeds in amounts due to       -               2            -
     related-party companies
     Collection in amounts due        -               11           -
     from shareholders
     Peceipt in loan from             9               3,000        -
     non-related companies
     Payment in loan to               -               (4,208)      -
     non-related companies
     (Repayment) in amounts due       -               -            (200)
     to shareholders
     Proceeds from issuance of        -               -            14,503
     shares
     Dividend paid to                 -               -            (422)
     shareholders
Net cash provided by financing        9               (1,190)      10,318
activities
Effect of exchange rate changes       211             209          254
on cash and cash equivalents
Net increase in cash and cash         (2,310)         (6,160)      14,565
equivalents
     Cash and cash equivalents at     8,749           14,909       344
     beginning of year
     Cash and cash equivalents at $   6,439      $    8,749     $  14,909
     end of year
Supplemental disclosure of cash
flow information
     Interest paid                $   -          $    -         $  218
     Income taxes paid            $   -          $    1,608     $  92
Note: In March 2010, the Company changed its fiscal year-end from November
30th to September 30th, so that it would have the same fiscal year end as its
VIE, Xi'an Kingtone Information Technology Co., Ltd. ("Kingtone Information").
Accordingly, the Company is presenting its consolidated and combined
statements of operations and comprehensive income (loss) and cash flow for the
years ended September 30, 2011 and 2010.



KINGTONE WIRELESSINFO SOLUTION HOLDING LTD AND SUBSIDIARIES
CONSOLIDATED AND COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY
(Express in thousands of U.S. Dollars, except shares and per share data)
                  Ordinary shares      Paid-in   Additional   Appropriated   Unappropriated   Comprehensive   Total
                  No. of      Amount   Capital   Paid-in      Retained       Retained         Income          Stockholders'
                  shares                         Capital      Earnings       Earnings                         Equity
Balance as of
November 30,      1,000,000 $ 10     $ 6,897   $ 216        $ 231          $ 657            $ 1,115         $ 9,126
2009
 Issuance of
 ordinary shares  400,000     4        -         14,500       -              -                -               14,504
 in form of ADSs
 Share-based     -           -        -         302          -              -                -               302
 compensation
 Net income for  -           -        -         -            -              8,237            -               8,237
 the year
 Payment of      -           -        -         -            -              -                -               -
 dividends
 Effect of       -           -        (6,897)   6,897        -              -                -               -
 reorganization
 Transfer to
 statutory        -           -        -         -            613            (613)            -               -
 reserves
 Foreign
 currency         -           -        -         -            -              -                598             598
 translation
 gain
Balance as of
September 30,     1,400,000 $ 14     $ -       $ 21,915     $ 844          $ 8,281          $ 1,713         $ 32,767
2010
 Issuance of
 ordinary shares  5,000       -        -         -            -              -                -               -
 in form of ADSs
 Share-based     -           -        -         316          -              -                -               316
 compensation
 Net loss for    -           -        -         -            -              (1,037)          -               (1,037)
 the year
 Transfer to
 statutory        -           -        -         -            771            (771)            -               -
 reserves
 Foreign
 currency         -           -        -         -            -              -                676             676
 translation
 gain
Balance as of
September 30,     1,405,000 $ 14     $ -       $ 22,231     $ 1,615        $ 6,473          $ 2,389         $ 32,722
2011
 Issuance of
 ordinary shares  -           -        -         -            -              -                -               -
 in form of ADSs
 Share-based     -           -        -         2            -              -                -               2
 compensation
 Net loss for    -           -        -         -            -              (8,988)          -               (8,988)
 the year
 Transfer to
 statutory        -           -        -         -            -              -                -               -
 reserves
 Foreign
 currency         -           -        -         -            -              -                1,194           1,194
 translation
 gain
Balance as of
September 30,     1,405,000 $ 14     $ -       $ 22,233     $ 1,615        $ (2,515)        $ 3,583         $ 24,930
2012

SOURCE Kingtone Wirelessinfo Solution Holding Ltd

Website: http://www.kingtoneinfo.com
Website: http://www.InvestorCalendar.com
 
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