China Trading Stocks

[tbirdman]

KONE - HUGE turnaround reported as expected and guiding a profitable 2014:

http://archive.fast-edgar.com/20140117/A6AZ622CZ222LTZ222232ZZGR4CFZB22NG62

Kingtone Wirelessinfo Solution Holding Ltd Reports Fiscal Year 2013 Financial Results; Provides Fiscal Year 2014 Revenue and Net Income Guidance

FY13 Revenues Up 696.8% to $11.6 million from $1.5 million in the Prior Year 01/17 04:00 AM

FY13 Gross Profit Up 527.7% to $1 million from $0.2 million loss in the Prior Year

FY13 Basic and Diluted Loss Per Share Up to $3.65 from Loss Per Share of $6.40 in the Prior Year

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XI'AN, China, Jan. 17, 2014 /PRNewswire-FirstCall/ -- Kingtone Wirelessinfo Solution Holding Ltd (KONE:$4.9499,$-0.1501,-2.94%) ("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, 2013. 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 2013 Financial Highlights

Revenues increased by 696.8% to approximately $11.6 million from approximately $1.5 million in the prior year period.
Gross profit increased by 527.7% to approximately $1 million gross profit from approximately $0.2 million loss in the prior year period.
Gross margin increased to 8.8% from minus 16.4% in the prior year period.
Net loss of approximately $5.1 million as compared to net loss of approximately $9.0 million in the prior year period.
Basic and diluted loss per share were $3.65 as compared to loss per share of $6.40 in the prior year period with weighted average shares outstanding of 1,405,000 in both periods.
"We are very glad to see the revenue has grown dramatically during the fiscal year 2013," said Mr. Peng Zhang, Chief Executive Officer of the Company, "Thanks for our investors being patient with our business and capital market performance and staying with the company during the difficult time when the company's business didn't do well for the past two years. In the future we will continue to take measures to improve our performance and strengthen our business model to achieve sustainable growth."

Fiscal Year 2013 Financial Performance

Results of Operations - The year ended September 30, 2013 compared to the year ended September 30, 2012.

Revenues.

For the year ended September 30, 2013, our revenues increased by 696.8% to approximately $11.6 million in the year ended September 30, 2013 from approximately $1.5 million in the year ended September 30, 2012.

Our revenue from software solution sales increased by 5.8% to approximately $0.29 million in the year ended September 30, 2013 from approximately $0.28 million in the year ended September 30, 2012. As a percentage of total revenue, software solution sales decreased from 19.0% to 2.5%. Our revenue from wireless system solution sales increased by 858.4% to approximately $11.3 million in the year ended September 30, 2013 from approximately $1.2 million in the year ended September 30, 2012. As a percentage of total revenue, wireless system solution revenue increased from 81.0% to 97.5% of our total revenue. The significant increase in our wireless solution revenue was mainly due to that we entered into 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 ("Jingbian Industrial Park"). Hualu, a state-owned enterprise in China, is dedicated to all round engineering construction services. 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 has contributed RMB 63.6 million, or approximately $10.2 million revenue to the company during the fiscal year of 2013.

Cost of Sales.

Our cost of sales increased by 524.3% to approximately $10.5 million in the year ended September 30, 2013 from approximately $1.7 million in the year ended September 30, 2012. The increase in cost of sales was primarily attributable to the increase in revenue and gross margin from wireless system solutions business. As a percentage of our total revenues, our cost of sales decreased to 91.2% of revenues in the year ended September 30, 2013 from 116.4% of our total revenues in the year ended September 30, 2012.

Cost of sales for software decreased by 11.3% to approximately $0.5 million in the year ended September 30, 2013 from approximately $0.6 million in the year ended September 30, 2012, representing 5.4% and 37.9% of our total cost of sales and 2.5% and 19.0% of our software revenue in the fiscal years ended September 30, 2013 and 2012, respectively. Cost of sales for wireless system solutions increased by 851.0% to approximately $10.0 million in the year ended September 30, 2013 from approximately $1.0 million in the year ended September 30, 2012, representing 94.6% and 62.1% of total cost of sales and 97.5% and 81.0% of wireless system solution revenues in the fiscal years ended September 2013 and 2012, respectively. The increased percentage of cost of sales to wireless system solution revenues from September 30, 2012 to September 30, 2013 was due to the increase of corresponding revenue from September 30, 2012 to September 30, 2013.

Gross Profit and Gross Margin. Total gross profit increased by 527.7% to approximately $1 million gross profit in the year ended September 30, 2013 from approximately $0.2 million loss in the year ended September 30, 2012. Our total gross margin was 8.8% and minus 16.4% in the years ended September 30, 2013 and 2012, respectively. This increase of gross profit and gross margin was primarily due to the increase of sales from wireless system solution, which resulted in the overall increase in industry profit and profit margin.

Our gross profit for software solution sales increased by 24.1% to approximately $0.3 million loss in the year ended September 30, 2013 from approximately $0.4 million loss in the year ended September 30, 2012. Our gross margin for software solutions sales increased to minus 95.2% in the year ended September 30, 2013 from minus 132.7% in the year ended September 30, 2012. Our gross profit for wireless system solution sales increased by 919.7% to approximately $1.3 million in the year ended September 30, 2013 from approximately $0.1 million in the year ended September 30, 2012. Our gross margin for wireless system solution sales increased to 11.5% in the year ended September 30,2013 from 10.8% in the year ended September 30, 2012.

Loss from Operations

We incurred a loss of $2.6 million in the year ended September 30, 2013, a 72.4% or $6.8 million decrease in such a loss from approximately loss of $9.4 million in the year ended September 30, 2012. The decrease in loss from operations was mainly due to significantly higher revenues from wireless system solutions business compounded by decreased operating expenses.

Other Income (Expense)

Our other expense increased 2060.0% to approximately $1.2 million in fiscal year 2013 from approximately $0.06 million of other income in fiscal year 2012, and represented 10.2% and 4.1% of our revenue for the years ended September 30, 2013 and 2012, respectively. The increase in our other expense was largely due to that we confirmed the loss from loan to an unrelated third party. As a U.S. 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 Info-tech Holdings Pte Ltd, the Company's wholly owned subsidiary in Singapore ("Topsky") and Xi'an Kingtone Information Technology Co., Ltd., the Company's variable interest entity in China ("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 had written off the balance of the long-term receivable and charged to other expense for the year ended September 30, 2013.

Net Loss

We incurred a net loss of $5.1 million in the year ended September 30, 2013 as compared to net loss of approximately $9.0 million in the year ended September 30, 2012, representing a decrease of 42.9%. Basic and diluted loss per share was $3.65 in the year ended September 30, 2013, compared to loss per share $6.40 in the prior year period. The number of weighted average ordinary shares outstanding was 1,405,000 for the years ended September 30, 2013 and 2012, respectively.

Liquidity and Capital Resources.

Cash and Cash Equivalents. As of September 30, 2013, the Company had cash and cash equivalents of $6.1 million, compared to $6.4 million in the prior year period.

Net cash provided by operating activities was approximately minus $0.4 million for the year ended September 30, 2013 as compared to $2.4 million net cash used in operating activities for the year ended September 30, 2012. During the fiscal year 2013, the Company had a net loss of $5.1 million, out of which $0.6 million was depreciation and amortization and $0.5 million was bad debt expense. In addition, the Company had net investment in sales-type leases of $1.4 million, increased accounts and notes receivable by $1.7 million and increased unbilled revenue by $5.4 million.

Net cash provided by investing activities for the year ended September 30, 2013 was approximately $7 thousand as compared to net cash used in investing activities of approximately $0.1 million for the year ended September 30, 2012. The cash provided by investing activities in 2013 was mainly due to disposal of property and equipment and the cash used in investing activities in fiscal year 2013 and 2012 were mainly attributable to purchasing property and equipment.

Net cash used in financing activities for the year ended September 30, 2013 was approximately $1 thousand as compared to net cash provided by financing activities of approximately $9 thousand for the year ended September 30, 2012.

Financial Outlook.

For the fiscal year ending September 30, 2014, management expects revenues of $12.0 million to $15.0 million and net income of $0.5 million to $1 million.