XI'AN, China, Jan. 15, 2015 /PRNewswire-FirstCall/ -- Kingtone
Wirelessinfo Solution Holding Ltd (Nasdaq CM: KONE) ("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, 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").
Fiscal Year 2014 Financial Highlights
- Revenues decreased by 46.5% to approximately $6.2 million from approximately $11.6 million in the prior year period.
- Gross profit increased by 92.9% to approximately $2.0 million gross profit from approximately
$1.0 million loss in the prior year
period.
- Gross margin increased to 31.7% from 8.8% in the prior year
period.
- Net loss of approximately $1
thousand as compared to net loss of approximately
$5.1 million in the prior year
period.
- Basic and diluted loss per share were $0 as compared to loss per share of $3.65 in the prior year period with weighted
average shares outstanding of 1,405,000 in both periods.
"We are pleased with our cost-control process leading our
significantly increased profit during the last fiscal year," said
Mr. Peng Zhang, Chief Executive
Officer of the Company, "Looking forward to the Fiscal Year 2015,
we expect revenue of $12.0
million to $15.0 million; net
income of $0.5 million to $1.0
million. We are confident in accomplishing our goals in the
next year."
Fiscal Year 2014 Financial Performance
Results of Operations - The fiscal year ended September 30, 2014 compared to the fiscal year
ended September 30, 2013.
Revenue
We are a China-based developer
and provider of mobile enterprise solutions. We generate revenue in
two ways, from customized software middleware and applications for
various public and private service agencies, which we identify as
software solution sales, and from packaged solutions that include
both software and hardware in automation telematics for clients
mainly in the manufacturing sector, which we identify as wireless
system solution sales. In the year ended September 30, 2014, we experienced a significant
contraction in our software solution business and our wireless
system solution business. Thereafter our revenue decreased by 46.5%
to approximately $6.2 million in the
year ended September 30, 2014 from
approximately $11.6 million in the
year ended September 30, 2013.
Our revenue from software solution sales decreased by 35.7% to
approximately $0.2 million in the
year ended September 30, 2014 from
approximately $0.3 million in the
year ended September 30, 2013. As a
percentage of total revenue, software solution sales increased from
2.5% to 3.0%.
Our revenue from wireless system solution sales decreased by
46.8% to approximately $6.0 million
in the year ended September 30, 2014
from approximately $11.3 million in
the year ended September 30, 2013. As
a percentage of total revenue, wireless system solution revenue
decreased from 97.5% to 97.0% of our total revenue. This decreased
was insignificant.
Cost of Sales
Our cost of sales decreased by 60.0% to approximately
$4.2 million in the year ended
September 30, 2014 from approximately
$10.5 million in the year ended
September 30, 2013. The decrease in
cost of sales was primarily attributable to the decrease in revenue
and increase in gross margin from both of our business sections. As
a percentage of our total revenues, our cost of sales decreased to
68.3% of revenues in the year ended September 30, 2014 from 91.2% of our total
revenues in the year ended September 30,
2013, which is partially attributable to the fact that the
projects the Company had worked on were with old clients and
therefore made our work more efficient.
Cost of sales for software decreased by 81.9% to approximately
$0.1 million in the year ended
September 30, 2014 from approximately
$0.5 million in the year ended
September 30, 2013, representing 2.5%
and 5.4% of our total cost of sales and 55.1% and 195.2% of our
software revenue in the fiscal years ended September 30, 2014 and 2013, respectively. Cost
of sales for wireless system solutions decreased by 58.7% to
approximately $4.1 million in the
year ended September 30, 2014 from
approximately $10.0 million in the
year ended September 30, 2013,
representing 97.5% and 94.6% of total cost of sales and 68.7% and
88.5% of wireless system solution revenues in the fiscal years
ended September 2014 and 2013,
respectively. The decreased percentage of cost of sales in our both
business sections from September 30,
2013 to September 30, 2014 was
mainly due to the decrease in revenue and increase in gross
margin.
Gross Profit and Gross Margin
Our total gross profit increased by 92.9% to approximately
$1.96 million gross profit in the
year ended September 30, 2014 from
approximately $1.02 million loss in
the year ended September 30, 2013.
Our total gross margin was 31.7% and 8.8% in the years ended
September 30, 2014 and 2013 of total
revenue, respectively. This increase of gross profit and gross
margin was primarily due to the increase in industry profit and
profit margin and revenue from Jingbian integration project that
was partially recognized in the last fiscal year as of September 30, 2014.
Our gross profit for software solution sales increased by 69.7%
to approximately $0.08 million in the
year ended September 30, 2014 from
approximately $0.3 million loss in
the year ended September 30, 2013.
Our gross margin for software solutions sales increased to 44.9% in
the year ended September 30, 2014
from minus 95.2% in the year ended September
30, 2013. Our gross profit for wireless system solution
sales increased by 45.2% to approximately $1.9 million in the year ended September 30, 2014 from approximately
$1.3 million in the year ended
September 30, 2013. Our gross margin
for wireless system solution sales increased to 31.3% in the year
ended September 30, 2014 from 11.5%
in the year ended September 30, 2013,
which is partially attributable to the higher margin of some of the
wireless projects. The increase in gross margins in both of
our business sections above was due to the fact we had higher gross
margin projects and smaller up-front investments with old
customers comparing to the last fiscal year.
Loss from Operations
We incurred a loss of $0.5 million
in the year ended September 30, 2014,
a 79.1% decrease in such a loss from approximately loss of
$2.6 million in the year ended
September 30, 2013. The decrease in
loss from operations was mainly due to significantly higher gross
profit from wireless system solutions business compounded by
decreased operating expenses.
Other Income (Expense)
Our other income increased 143.3% to approximately $0.5 million in fiscal year 2014 from
approximately $1.2 million of other
expense in fiscal year 2013, and represented 8.2% and 10.2% of our
revenue for the years ended September 30,
2014 and 2013, respectively. The increase in our other
income was largely due to our rental income. In April 2008, we purchased an approximately 20,000
square meter six-story warehouse and industrial facility in
Xi'an, which we named the
"Kingtone Center". 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" to
Zhongde with a monthly rent of approximately $0.1 million from July 1,
2014 till December 31,
2034. The rent will have an
incremental 2 percent increase year over year during the next
following years.
As a US listed company, the Company is in need of US dollar to
cover oversea expenses. Since State Administration of Foreign
Exchange in China imposes
restrictions on the remittance of currency out of China, Topsky and Kingtone Information entered
into a loan and guarantee agreement on July
21, 2011 with an unrelated third party to have Topsky borrow
US$3 million to cover oversea
expenses and take RMB27.9 million, or
US$4.2 million from Kingtone
Information as a guarantee. The offset amount US$1.2 million was presented as long-term other
receivables in the anticipation that the agreement would be settled
in two years. The loan matured on July
21, 2013 and the long-term receivable was
non-collectable. As a result, we have written off the balance
of the long-term receivable and charged to other expensed for the
year ended September 30,
2013.
Net Loss
We incurred a net loss of $0.001
million in the year ended September
30, 2014 as compared to net loss of approximately
$5.1 million in the year ended
September 30, 2013, representing a
decrease of 99.9% in net loss. Basic and diluted loss per share was
$0 in the year ended September 30, 2014, compared to loss per share
$3.65 in the prior year period. The
number of weighted average ordinary shares outstanding was
1,405,000 for the years ended September 30,
2014 and 2013, respectively.
Liquidity and Capital Resources.
Cash and Cash Equivalents.
As of September 30, 2014, the
Company had cash and cash equivalents of $6.1 million, compared to $6.4 million in the prior year period.
Net cash used in operating activities was approximately
$0.3 million for the year ended
September 30, 2014 as compared to
$0.4 million net cash used in
operating activities for the year ended September 30, 2013. During 2014, the
Company had a net loss of $1,000 and
depreciation and amortization of $0.6
million. In addition, the Company had decreased accounts and
notes receivable by $0.3 million and
decreased unbilled revenue by $1.0
million.
Net cash used in investing activities for the year ended
September 30, 2014 was approximately
$137,000 as compared to net cash
provided by investing activities of approximately $7,000 for the year ended September 30, 2013. The cash used in investing
activities in 2014 was mainly due to purchasing certain property
and equipment. The cash provided by investing activities in 2013
was mainly a result of the sale of certain property and
equipment.
Net cash used in financing activities for the year ended
September 30, 2014 was approximately
$2.1 million as compared to net cash
used in financing activities of approximately $0.02 million for the year ended September
30,2013.The cash used in financing activities was mainly due to the
loan to related parities.
Financial Outlook.
For the fiscal year ending 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 hosted a conference call to discuss its fiscal
year 2014 financial results at 8:00 a.m.
ET on Thursday, January 15,
2015. Mr. Tao Li, Chairman, Mr. Peng
Zhang, Chief Executive Officer, Ms. Li Wu, Chief Financial Officer and Mr. Fang
Wang, Assistant to the Chief Financial Officer, were 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 #:
13598549
|
A replay of the call will be available until 11:59 PM ET on Jan. 17,
2014.
To access the replay, please dial any of the following
numbers:
USA Toll
Free:
|
877-660-6853
|
International:
|
201-612-7415
|
The conference call was
webcast live by Vcall and can be accessed at
http://www.investorcalendar.com/IC/CEPage.asp?ID=173506.
About Kingtone Wirelessinfo Solution Holding Ltd
Kingtone Wirelessinfo Solution Holding Ltd (Nasdaq CM: KONE) is
a China-based developer and
provider of mobile enterprise solutions. 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://en.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:
Mr: Fang Wang
Tel: +86-29-8826-6383
Email: wangfang@kingtoneinfo.com
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SOURCE Kingtone Wirelessinfo Solution Holding Ltd.