Kingtone WirelessInfo Solution Holding Ltd. (NasdaqCM: KONE) Investor Presentation August 2010 Safe 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. 2 1
Corporate Overview 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 3 Equity Snapshot NASDAQ: KONE FYE: 9/30 Price (08/06) $2.52 Basic/ Fully Diluted Shares Outstanding 14.0MM Market Cap $35.28MM 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 4 2
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 Mobile Devices Mobile phones PDAs Notebooks Portable Cameras Kingtone Mobile Enterprise Solution Kingtone Mobile Enterprise Applications Kingtone Mobile Enterprise Middleware Platform 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 5 Proven Flexible Platform Standardized modules Customized value added modules Scalable applications developed by us or third parties General Purpose Layer Basic Layer Information Processing and Distribution Messaging Flow Engine Stream Media Reporting Unified Data Center Information Security Signal Dispatch Information Exchange Integration Interface 6 3
Modular Software Applications ICT-Converged Applications Terminal-End RFID service Location-based service Stream media service Information exchange Management and configuration Information security Server-End RFID service Location-based service Stream media service Resource planning Gateway service Statistics and analysis Vertical Industry Applications Police Terminal-End Emergency response Administration of industry and commerce Environmental protection Automation telematics Police Server-End Emergency response Administration of industry and commerce Environmental protection Automation telematics 7 Market Segment Service Industry General business and government agencies Active cooperation with Big 3 telcos and direct sales Police Emergency Response Environmental Protection News Agencies Insurance Claims City Management Administration 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 8 4
Geographic Coverage 9 Market Segment Manufacturing Industry Factory production automation and mobile solutions Open bid via direct sales Oil & Gas Coal Mining Water Management Tobacco 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 10 5
Addressable Market 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 (1) According to an IDC article dated October 22, 2009 (2) CITIC Jiantou Securities 2009 Jan report 11 Flexible Sales Models JOINT MARKETING Nationwide business solutions demos Preferred software provider Penetrating through telecom s provincial and local branches DIRECT SALES Industry workshops and seminars Sales calls and visits On-site pilot application demos 12 6
Competitive Advantages in China Vs. Domestic Competitors Vs. International Competitors First mover Broader product range Platform versatility Technical standard setting High switching cost Responsive customer support Publicly traded with access to capital Instant customer support Affordable cost Cultural alignment Customer knowledge Data sensitivity 13 Growth Strategy Strategic Acquisitions Enhance relationship with Big 3 telcos Expanding new client base National geographic expansion Up-selling/Cross-selling to existing clients 14 7
Financial Results ($ MM) 12.0 10.0 8.0 Revenue 11.2 7.3 9.2 ($ MM) 8.0 7.0 6.0 5.0 Gross Profit 7.3 5.1 7.5 6.0 4.0 2.0 4.3 162% 25% 4.0 3.0 2.0 1.0 2.7 176% 48% - FY2008 FY2009 Q3YTD FY09 Q3YTD FY10 - FY2008 FY2009 Q3YTD FY09 Q3YTD FY10 ($ MM) 7.0 6.0 5.0 4.0 3.0 2.0 1.0 - EBIT Net Income 6.3 6.2 6.0 5.3 5.1 5.0 4.4 4.0 3.5 3.0 227% 44% 422% 47% 1.9 2.0 1.0 1.0 - FY2008 FY2009 Q3YTD FY09 Q3YTD FY10 FY2008 FY2009 Q3YTD FY09 Q3YTD FY10 15 Compounded Annual Growth Rate ($ MM) Margin Expansion Software Business Wireless System Solutions Gross Margin 56.4% Gross Margin 92.3% 90.8% 43.7% 34.2% 81.5% FY2008 FY2009 TTM FY2008 FY2009 TTM 77.0% Revenue Breakdown 54.0% 31.2% 62.2% Gross Margins 65.4% 74.7% 23.0% 46.0% 68.8% FY2008 FY2009 TTM Software Business Wireless System Solution TTM = Trailing twelve months as of June 30, 2010 FY2008 FY2009 TTM 16 8
Balance Sheet Summary ($ 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 17 Dedicated Management Tao Li Chairman Chairman since December 2007 Chairman & CEO China Green Agriculture, Inc. (NYSE: CGA) Northwest Polytechnic University Master in heat and metal treatment Peng Zhang CEO CEO since December 2009 Joined August 2001 as engineer; diverse management positions Chongqing Petroleum Technical School Ying Yang CFO CFO since April 2010 Former CFO of China Green Agriculture, Inc. (NYSE: CGA) University of California, Irvine; MBA in Finance; CPA Xianying Chen VP, AP Software system analyst since 2001 Shanghai Jiaotong University Master in Computer Science Pengguo Xi VP, R&D Senior programmer since 2003 Xi an Electronic Technology University Master in Computer Science 18 9
Investment Summary 1 First mover with over 130 installations 2 Proven technology with wide commercial applications 3 Strategic partnership with key high-end customers 4 Rapid growth opportunities with 3G roll out in China 5 Continuous R&D breakthroughs and excellent customer support 6 Dedicated and experienced management team 19 Contact Information Kingtone WirelessInfo Solution Holding Ltd Ying Yang 3 rd Floor, 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 Christensen International Ltd 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 Elizabeth Fei Chen 7 Times Square New York, NY 10036 Tel: (212) 421-4100 Email: echen@pryorcashman.com Auditor Bernstein & Pinchuk LLP Drew Bernstein Seven Penn Plaza, Suite 830 New York, NY 10001 Tel: (212) 279-7900 Email: drew@bpaccountants.com 20 10