Kingtone WirelessInfo Solution
Holding Ltd.
(NasdaqCM: KONE)
Investor Presentation
August 2010Safe Harbor Statement
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Any statements set forth herein that are not historical facts are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors include, but are not limited to, the Kingtone Wirelessinfo Solution Holding Ltd. (the “Company”) ability to market existing and new products, ability to access to capital for expansion, and changes from anticipated levels of sales, future national or regional economic and competitive conditions, changes in relationships with customers and other factors detailed from time to time in the Company's filings with the United States Securities and Exchange Commission and other regulatory authorities. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This presentation was developed by the Company, is intended solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy the Company’s stock. This presentation is based upon information available to the public, as well as other information from sources which management believes to be reliable, but is not guaranteed by the Company as being accurate nor does it purport to be complete. Opinions expressed herein are those of management as of the date of publication and are subject to change without notice.
Corporate Overview
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Our Business
Enterprise mobile solutions
Our Market
Government agencies and enterprises
Our Location
Headquartered in Xi'an with offices in Beijing and Chengdu
Our Team
180 employees with 72 in R&D and 47 in Engineering
NASDAQ: KONE FYE: 9/30
Price (08/06) $2.52
Market Cap $35.28MM
Equity Snapshot
Basic/ Fully Diluted Shares Outstanding 14.0MM
Revenue (TTM as of Q3 FY10) $13.09MM
Net Income (TTM as of Q3 FY10) $6.92MM
EPS (TTM as of Q3 FY10) $0.66
Kingtone Mobile Enterprise Solution
Corporate Information Systems
. . .
Office Automation (OA) System
Industrial Automation System
Enterprise Resource Planning (ERP) System Enterprise Asset Management (EAM) System Supply Chain Management (SCM) System
Customer Relation Management (CRM) Security and Video Surveillance System Kingtone Mobile Enterprise Middleware Platform Kingtone Mobile Enterprise Applications Mobile Devices Mobile phones PDAs Notebooks Portable Cameras
Proprietary Mobile Enterprise Solutions
• Seamless communication between corporate systems and mobile devices • Scalable platform and software applications
• Standardized as well as customized high added-value modules
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Proven Flexible Platform
General Purpose Layer
• Information Processing andDistribution • Messaging • Flow Engine • Stream Media • Reporting
Basic Layer
• Unified Data Center • Information Security • Signal Dispatch • Information Exchange • Integration Interface • Standardized modules• Customized value added modules
• Scalable applications developed by us or third parties
• RFID service
• Location-based service
• Stream media service
• Information exchange
• Management and configuration
• Information security
• Police
• Emergency response
• Administration of industry and commerce
• Environmental protection
• Automation telematics
Modular Software Applications
IC T -C o n v e rg e d A p p li c a ti o n s V e rt ic a l In d u s tr y A p p li c a ti o n s • RFID service • Location-based service
• Stream media service
• Resource planning
• Gateway service
• Statistics and analysis
• Police • Emergency response • Administration of industry and commerce • Environmental protection • Automation telematics Terminal-End
Terminal-End Server-EndServer-End
Terminal-End
Terminal-End Server-EndServer-End
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Case Study: Yan’An Police Department
• National model for law enforcement
• Need to increase effectiveness of patrolling and case reporting as well as integrate information of patrol officers, community police and investigators • Solutions
1) Provide fast, accurate information sharing 2) Improve cooperation between various police forces 3) Enhance multi-type comprehensive inquiries 4) Expedite case processing time
5) Build up on-site law enforcement
Market Segment – Service Industry
General business and government agencies Active cooperation with Big 3 telcos and direct sales
Police EmergencyResponse EnvironmentalProtection
News Agencies Insurance Claims
City Management Administration
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Geographic Coverage
Case Study: Yanchang Petroleum
• Oldest, top 5 oil company in China
• Need to increase efficiency in refinery operations • Solutions:
1) Automate delivery system and loading of shipments 2) Enable real-time inquiry and monitoring functions 3) Reduce accidents and provide a safer enviornment
Market Segment – Manufacturing Industry
Factory production automation and mobile solutions Open bid via direct sales
Oil & Gas Coal Mining
Water
Management Tobacco
Addressable Market
(1) According to an IDC article dated October 22, 2009 (2) CITIC Jiantou Securities 2009 Jan report
• Information technology creates economic growth and improves lives • Enterprise mobility market to reach $15.6bn in 2011; 6% CAGR since 2007(1)
• Government spent RMB 53.65bn on IT in 2009; expect RMB 73.36bn in 2013(1)
• Big 3 telcos to invest $ 44.0bn between 2009 and 2011(2)
• Kingtone is supplier/joint marketer with Big 3 telcos
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Flexible Sales Models
• Nationwide business solutions demos • Preferred software provider • Penetrating through telecom’s
provincial and local branches
JOINT
MARKETING
• Industry workshops and seminars • Sales calls and visits
• On-site pilot application demos
DIRECT
SALES
Competitive Advantages in China
Vs. Domestic
Competitors
• First mover
• Broader product range • Platform versatility • Technical standard setting • High switching cost
• Responsive customer support • Publicly traded with access to
capital
Vs. International
Competitors
• Instant customer support • Affordable cost • Cultural alignment • Customer knowledge • Data sensitivity 13
Growth Strategy
Up-selling/Cross-selling to existing clients Expanding new client base National geographic expansion Strategic Acquisitions Enhance relationship with Big 3 telcos 141.9 6.3 4.4 6.2 1.0 2.0 3.0 4.0 5.0 6.0 7.0
FY2008 FY2009 Q3YTD FY09 Q3YTD FY10
EBIT 227% 44% 1.0 5.3 3.5 5.1 1.0 2.0 3.0 4.0 5.0 6.0
FY2008 FY2009 Q3YTD FY09 Q3YTD FY10
Net Income 4.3 11.2 7.3 9.2 2.0 4.0 6.0 8.0 10.0 12.0
FY2008 FY2009 Q3YTD FY09 Q3YTD FY10
Revenue 2.7 7.3 5.1 7.5 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0
FY2008 FY2009 Q3YTD FY09 Q3YTD FY10
Gross Profit
Financial Results
($ MM) ($ MM) ($ MM) ($ MM) 162% 25%Compounded Annual Growth Rate 15
176% 48% 422% 47%
Margin Expansion
16 81.5% 90.8% 92.3% FY2008 FY2009 TTM Software Business Gross Margin 56.4% 43.7% 34.2% FY2008 FY2009 TTMWireless System Solutions Gross Margin 62.2% 65.4% 74.7% FY2008 FY2009 TTM Gross Margins 23.0% 46.0% 68.8% 77.0% 54.0% 31.2% FY2008 FY2009 TTM Revenue Breakdown
Software Business Wireless System Solution
($ in MM) FY2008 FY2009 Q3FY10
Cash $0.0 $0.3 16.0
Accounts Receivable 0.5 0.2 6.2
Total Current Assets 12.9 4.0 23.3
Total Assets 14.7 17.9 37.2
Total Debt 3.7 3.4 3.5
Total Liabilities 7.0 8.8 8.2
Shareholders’ Equity 7.7 9.1 29.0
Balance Sheet Summary
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Dedicated Management
18 Chairman since December 2007
Chairman & CEO China Green Agriculture, Inc. (NYSE: CGA) Northwest Polytechnic University Master in heat and metal treatment Tao Li
Chairman
CEO since December 2009
Joined August 2001 as engineer; diverse management positions Chongqing Petroleum Technical School
Peng Zhang CEO
CFO since April 2010
Former CFO of China Green Agriculture, Inc. (NYSE: CGA) University of California, Irvine; MBA in Finance; CPA Ying Yang
CFO
Software system analyst since 2001
Shanghai Jiaotong University Master in Computer Science Xianying Chen
VP, AP
Senior programmer since 2003
Xi’an Electronic Technology University Master in Computer Science Pengguo Xi
Investment Summary
First mover with over 130 installations
Proven technology with wide commercial applications
Strategic partnership with key high-end customers
Continuous R&D breakthroughs and excellent customer support Rapid growth opportunities with 3G roll out in China
Dedicated and experienced management team
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19Kingtone WirelessInfo Solution
Holding Ltd Christensen International Ltd
Ying Yang
3rdFloor, Borough A, Block A. No. 181,
South Taibai Road
Xi’an, Shaanxi Province, China Tel: (86) 29 8826 6368 Cell: (626) 623 2575
Email: yangying@kingtoneinfo.com
Roger Hu / Kathy Li
A1015 Bldg 3, 32 Baiziwan Road Chaoyang District
Beijing, China
Tel: (8610) 5971 2001 / (212) 618 1978 Cell: (86) 158 1049 5326
Email: rhu@christensenir.com
Legal Counsel – Pryor Cashman LLP Auditor – Bernstein & Pinchuk LLP
Elizabeth Fei Chen 7 Times Square New York, NY 10036 Tel: (212) 421-4100
Email: echen@pryorcashman.com
Drew Bernstein
Seven Penn Plaza, Suite 830 New York, NY 10001 Tel: (212) 279-7900
Email: drew@bpaccountants.com