Document and Entity Information
Document and Entity Information | 12 Months Ended |
Sep. 30, 2017shares | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | Kingtone Wirelessinfo Solution Holding Ltd |
Entity Central Index Key | 1,487,839 |
Trading Symbol | KONE |
Amendment Flag | false |
Current Fiscal Year End Date | --09-30 |
Document Type | 20-F |
Document Period End Date | Sep. 30, 2017 |
Document Fiscal Period Focus | FY |
Document Fiscal Year Focus | 2,017 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Common Stock, Shares Outstanding | 1,405,000 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2017 | Sep. 30, 2016 | |
Current assets | |||
Cash and cash equivalents | $ 902 | $ 1,239 | |
Accounts and Notes Receivable, net of allowance | [1] | 3,399 | 4,243 |
Accrued interest | [1] | 288 | 385 |
Due from related companies | [1] | 819 | 6,152 |
Inventories, net | [1] | 45 | 90 |
Other receivables and prepayments | [1] | 115 | 225 |
Total Current Assets | 5,568 | 12,334 | |
Non-current assets | |||
Due from related companies | 6,167 | ||
Property and Equipment, net | [1] | 10,370 | 10,863 |
Intangible assets | [1] | 509 | 527 |
Other assets | [1] | 387 | |
Total Assets | 23,001 | 23,724 | |
Current liabilities | |||
Accounts payable | [1] | 917 | 1,277 |
Advances from customers | [1] | 368 | 381 |
Other payables and accruals | [1] | 142 | 195 |
Taxes payable | [1] | 1,278 | 1,406 |
Dividend payable | [1] | 777 | 775 |
Total Current Liabilities | 3,482 | 4,034 | |
Stockholders' equity | |||
Ordinary share ($0.01 par value, 100,000,000 shares authorized, 1,405,000 shares issued and outstanding as of September 30, 2017 and 2016, respectively) | 14 | 14 | |
Additional paid in capital | [1] | 22,233 | 22,233 |
Appropriated retained earnings | [1] | 2,485 | 2,060 |
Unappropriated retained earnings | [1] | (7,871) | (7,227) |
Accumulated other comprehensive income | [1] | 2,658 | 2,610 |
Total Shareholders' Equity | 19,519 | 19,690 | |
Total Liabilities and Shareholders' Equity | $ 23,001 | $ 23,724 | |
[1] | All of the VIE's assets can be used to settle obligations of their primary beneficiary. Liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company's general assets (Note 3). |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2017 | Sep. 30, 2016 |
Statement of Financial Position [Abstract] | ||
Ordinary share, par value | $ 0.01 | $ 0.01 |
Ordinary share, shares authorized | 100,000,000 | 100,000,000 |
Ordinary share, shares issued | 1,405,000 | 1,405,000 |
Ordinary share, shares outstanding | 1,405,000 | 1,405,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenues | |||
Software | $ 62 | $ 136 | |
Wireless system solution | 173 | 1,130 | 8,683 |
-Third Party | 173 | 1,130 | 8,683 |
Total revenues | 173 | 1,192 | 8,819 |
Cost of sales | |||
Software | 25 | 40 | 61 |
Wireless system solution | 324 | 948 | 5,557 |
-Third Party | 324 | 948 | 5,557 |
Total cost of sales | 349 | 988 | 5,618 |
Gross profit | (176) | 204 | 3,201 |
Operating expenses | |||
Selling and marketing expenses | 101 | 134 | 153 |
General and administrative expenses | 1,471 | 1,917 | 3,355 |
Research and development expenses | 55 | 288 | |
Total Operating expenses | 1,572 | 2,106 | 3,796 |
Loss from operations | (1,748) | (1,902) | (595) |
Other income (expense) | |||
Interest income | 289 | 400 | 29 |
Loss of net investment in sales-type leases | |||
Other income, net | 1,240 | 1,342 | 1,593 |
- Related party | 1 | 6 | 45 |
-Third Party | 1,239 | 1,336 | 1,548 |
Total other income, net | 1,529 | 1,742 | 1,622 |
Income (Loss) before income tax expenses | (219) | (160) | 1,027 |
Income tax expenses | |||
Net Income (Loss) | (219) | (160) | 1,027 |
Other comprehensive income | |||
Foreign currency translation gain (loss) | 48 | (867) | (686) |
Comprehensive income(loss) | $ (171) | $ (1,027) | $ 341 |
Income (Loss) per ordinary share: | |||
Basic and Diluted | $ (0.16) | $ (0.11) | $ 0.73 |
Weighted average number of ordinary shares outstanding Basic and Diluted | 1,405,000 | 1,405,000 | 1,405,000 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Total | Ordinary shares | Paid-in capital | Additional paid-in Capital | Appropriated retained earnings | Unappropriated retained earnings | Accumulated other comprehensive income |
Balance at Sep. 30, 2014 | $ 20,376 | $ 14 | $ 22,233 | $ 1,615 | $ (7,649) | $ 4,163 | |
Balance, shares at Sep. 30, 2014 | 1,405,000 | ||||||
Net income for the year | 1,027 | 1,027 | |||||
Foreign currency translation loss | (686) | (686) | |||||
Balance at Sep. 30, 2015 | 20,717 | $ 14 | 22,233 | 1,615 | (6,622) | 3,477 | |
Balance, shares at Sep. 30, 2015 | 1,405,000 | ||||||
Net income for the year | (605) | (605) | |||||
Appropriated retained earnings | 445 | 445 | |||||
Foreign currency translation loss | (867) | (867) | |||||
Balance at Sep. 30, 2016 | 19,690 | $ 14 | 22,233 | 2,060 | (7,227) | 2,610 | |
Balance, shares at Sep. 30, 2016 | 1,405,000 | ||||||
Net income for the year | (644) | (644) | |||||
Appropriated retained earnings | 425 | 425 | |||||
Foreign currency translation loss | 48 | 48 | |||||
Balance at Sep. 30, 2017 | $ 19,519 | $ 14 | $ 22,233 | $ 2,485 | $ (7,871) | $ 2,658 | |
Balance, shares at Sep. 30, 2017 | 1,405,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities | |||
Net income (loss) | $ (219) | $ (160) | $ 1,027 |
Depreciation and amortization | 577 | 538 | 608 |
Bad debt expense | (75) | (8) | 1,405 |
Changes in operating assets and liabilities | |||
Accounts and notes receivable | 910 | (22) | (1,163) |
Accrued interest | (284) | (393) | |
Unbilled revenue | 4,967 | ||
Other receivables and prepayments | 110 | (73) | 917 |
Inventories | 45 | 70 | 1,967 |
Tax payable | (128) | (75) | 330 |
Accounts payable | (353) | (709) | 269 |
Advance from customers | (14) | 8 | (7,947) |
Other payables and accruals | (53) | 44 | (14) |
Net cash provided by (used in) operating activities | 516 | (780) | 2,366 |
Cash flows from investing activities | |||
Payment to purchase property and equipment | (29) | (66) | (27) |
Proceeds from disposal of property and equipment | 44 | 28 | |
Net cash (used in) provided by investing activities | (29) | (22) | 1 |
Cash flows from financing activities | |||
Repayment to related party | (3) | ||
Payment in loan to related companies | (800) | (690) | (3,711) |
Net cash used in financing activities | (800) | (690) | (3,714) |
Effect of exchange rate changes on cash and cash equivalents | (24) | (12) | (76) |
Net decrease in cash and cash equivalents | (337) | (1,504) | (1,423) |
Cash and cash equivalents at beginning of year | 1,239 | 2,743 | 4,166 |
Cash and cash equivalents at end of year | 902 | 1,239 | 2,743 |
Supplemental disclosure of cash flow information | |||
Interest paid | |||
Income taxes paid | $ 105,409 |
Organization and Principal Acti
Organization and Principal Activities | 12 Months Ended |
Sep. 30, 2017 | |
Organization and Principal Activities [Abstract] | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | NOTE 1. ORGANIZATION AND PRINCIPAL ACTIVITIES Kingtone Wirelessinfo Solution Holding Ltd (“Kingtone Wireless”) was incorporated in the British Virgin Islands on October 27, 2009 under the name of Reizii Capital Management Limited. It has wholly-owned subsidiaries and a variable interest entity (“VIE”). Its wholly-owned subsidiaries include: Topsky Info-tech Holdings Pte Ltd. (“Topsky”), which was established in Singapore on November 3, 2009, and Xi’an Softech Co., Ltd. (“Softech”), which was established in Xi’an, Shaanxi Province, China on November 27, 2009 by Topsky. Its VIE is Xi’an Kingtone Information Technology Co., Ltd. (“Kingtone Information”) which was incorporated in Xi’an, Shaanxi province, China on December 28, 2001. Kingtone Wireless and its wholly-owned subsidiaries and VIE together are referred to as the “Company”. On December 17, 2009, Reizii Capital Management Limited changed its name to Kingtone Wirelessinfo Solution Holding Ltd. On March 23, 2010, the board of directors of Kingtone Wireless resolved to change the fiscal year end of Kingtone Wireless and its wholly-owned subsidiaries, Topsky and Softech, from November 30 th th On May 14, 2010, the Company completed the initial public offering of its American Depositary Shares (“ADSs”) at a price of $4.00 per ADS and listed its ADS on the NASDAQ Capital Market under the symbol “KONE.” The Company sold an aggregate of 4,000,000 ADSs, representing 4,000,000 ordinary shares and received net proceeds of approximately $14.5 million, net of underwriting discounts and other offering expenses. The Company is principally involved in developing and implementing mobile enterprise solutions for its customers in a broad variety of sectors and industries to improve its operating efficiency by facilitating mission-specific field and long-distance information management in wireless environments through its VIE, Kingtone Information. Effective November 6, 2012, the Company conducted a 1-for-10 reverse stock split of all issued and outstanding shares of its ordinary shares (or “Reverse Stock Split,” as explained in more details under Note 21). Upon the effect of the Reverse Stock Split, the Company’s issued and outstanding shares reduced from 14,050,000 to 1,405,000. |
Going Concern
Going Concern | 12 Months Ended |
Sep. 30, 2017 | |
Going Concern [Abstract] | |
Going Concern | NOTE 2. Going Concern The Company’s consolidated financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of and for the year ended September 30, 2017, the Company has incurred significant operating losses and revenues decreased. The recurring loss raise substantial doubt concerning the Company’s ability to continue as a going concern for a reasonable period of time. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management’s Plan to Continue as a Going Concern In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plans to obtain such resources for the Company include (1) obtaining contracts with high gross margin, (2) proceeds from the loans lent to its related parties, (3) rental income and (4) short-term or long-term borrowings from banks, stockholders or other party (ies) when needed. However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans. Despite the Company’s effort to accomplish the plans described in the preceding paragraph, there is no assurance that the Company’s plans and actions will be successful. The Company’s consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities during the normal course of operations. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Sep. 30, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of presentation The consolidated financial statements of the Company have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements as of September 30, 2017 include the financial statements of Kingtone Wireless, its subsidiaries, and its VIE for which Kingtone Wireless is the primary beneficiary. All inter-company transactions and balances between Kingtone Wireless, its subsidiaries and its VIE are eliminated upon consolidation. In the opinion of management, all adjustments considered necessary for a fair presentation have been included, and such adjustments are of a normal recurring nature. (b) Foreign currency transaction The functional currency of the Company is United States dollars (“US$“or “U.S. dollars”), and the functional currency of Topsky is Singapore dollars (“SG$”). The functional currency of the Company’s PRC subsidiaries, Softech and Kingtone Information, is Renminbi (“RMB”), and PRC is the primary economic environment in which the Company operates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. The resulting exchange differences are included in the determination of net income for the respective periods. For financial reporting purposes, the financial statements of the Company’s PRC subsidiaries which are prepared using RMB, are translated into Company’s reporting currency, the “U.S. dollar”. Assets and liabilities are translated using the exchange rate at each balance sheet date. Revenue and expenses are translated using average rates prevailing during each reporting period, and shareholders’ equity is translated at historical exchange rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income in shareholders’ equity. The exchange rates applied are as follows: 2017 2016 2015 RMB exchange rate at balance sheets dates, 6.6545 6.6702 6.3638 Average RMB exchange rate for each period 6.8122 6.5321 6.1648 No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation. The source of the exchange rates is OANDA (Forex Trading and Exchange Rates Services). (c) Use of estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Management makes these estimates using the best information available at the time the estimates are made. Significant estimates and judgments made by management include: (i) estimates of profits and losses on contracts in process; (ii) accrual of estimated liabilities; and (iii) contingencies and litigation. However, actual results could differ from those estimates. (d) Cash and cash equivalents Cash and cash equivalents represent cash on hand and deposits held with banks. The Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. (e) Accounts and notes receivable Accounts and notes receivable are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts as needed. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based on aging data, historical collection experience, customer specific facts and economic conditions. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company did not have any off-balance-sheet credit exposure related to its customers. (f) Inventories Inventories consist of raw materials, finished goods, and project-in-progress, which include direct labor, direct materials and overhead costs related to projects. Inventories are stated at lower of cost or market value. Cost is determined using first in first out method. Where there is evidence that the market value of inventories, in their disposal in the ordinary course of business, will be less than cost, whether due to physical deterioration, obsolescence, changes in price levels, or other causes, the carrying value of inventories will be written down. (g) Property and equipment The Company states property and equipment at cost less accumulated depreciation. The Company computes depreciation using straight-line method over the estimated useful lives of the assets with 5% residual value. Estimated useful lives of property and equipment: Useful Life Property and improvements 20-35 years Transportation equipment 5 years Office equipment 5 years Furniture 5 years Electronic equipment 3-5 years The Company eliminates the cost and related accumulated depreciation of assets sold or otherwise retired from the accounts and includes any gain or loss in the statement of income. The Company charges maintenance, repairs and minor renewals directly to expenses as incurred, and it capitalizes major additions and renovations to buildings and equipment. (h) Impairment of long-lived assets The Company applies the Accounting Standards Codification (“ASC”) No. 360-10 “Property, plant and equipment”, ASC No. 360 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. The Company tests long-lived assets, including property and equipment and intangible assets subject to periodic amortization, for recoverability at least annually or more frequently upon the occurrence of an event or when circumstances indicate that the net carrying amount is greater than its fair value. Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally measured by discounting expected future cash flows as the rate the Company utilizes to evaluate potential investments. The Company estimates fair value based on the information available in making whatever estimates, judgments and projections are considered necessary. No impairment of long-lived assets was recognized for the years ended September 30, 2017 and 2016, respectively. (i) Statutory surplus reserve The Company is required to set aside 10% of its income after income taxes prepared in accordance with PRC accounting regulations to the statutory surplus reserve until the balance reaches 50% of the paid-in capital or registered capital, after which further appropriation will be at the directors’ recommendation. (j) Revenue recognition Revenues consist primarily of sales of wireless system software service solutions and other customized software with support contracts. The Company recognizes revenue when (1) pervasive evidence of an arrangement exists, (2) delivery has occurred and customer acceptance is reasonable assured (3) the fee is fixed or determinable, and (4) collectability is probable. The Company generally provides wireless system software service solutions and customized software under short and long-term fixed-price contracts that require significant production and customization. The contract periods generally range from two months to one year in length. The Company recognizes income for these contracts following both the percentage-of-completion method, measured by contract milestones and on the basis of actual costs incurred versus the total estimated contract costs, and on the completed contract method in accordance with the ASC No. 605-35 “ Construction-Type and Certain Production-Type Contracts Provided unapproved change orders or claims occur, in accounting for contracts, the Company follows ASC No. 605-35. The Company will recognize as revenue costs associated with unapproved change orders or claims to the extent it is probable that such claims and change orders will result in additional contract revenue, and the amount of such additional revenue can be reliably estimated. Contract losses are provided for in their entirety in the period that they become known, without regard to the percentage-of-completion. However, the Company has not experienced significant unapproved change orders in the past. The software contracts generally provide for post-contract customer support (“PCS”) for a period of one year from delivery of the software. The value of PCS revenue is not separately reported and is accounted for as part of the entire fee under the contract accounting methods described above since the PCS meets the criteria specified in ASC No. 985-605-25-71 as follows: 1. PCS is included in the total contract price; 2. PCS is for one year or less; 3. estimated costs are insignificant; 4. upgrades and enhancements during the PCS term have historically been and are expected to continue to be minimal and infrequent; and 5. the contract does not include any service elements that are accounted for separately. The Company signed a lease encompassed a 20-year period from January 2014 and to February 2033 with Xi-an sino-german orthopedic hospital to rent their building. The rental will be about $1.2 million for the first year and will yearly increase 2% - 3% based on the rental of previous year in the subsequent years. The Company recognizes revenue on straight line basis. All other services are provided under separate agreements and fee arrangements and the related revenue is recognized over the period the services are provided. Unbilled revenue consists of recognized recoverable costs and accrued profits on contracts for which billings had not been presented to clients as of the balance sheet date. The Company presents all sales revenue net of a value-added tax (“VAT”). The Company recognizes revenue using the fair value of the wireless system software service solutions and other customized software by reference to the retail market price of the wireless system software service solutions and other customized software. These revenues are recorded as “Software Revenue”. (k) Cost of Sales When the criteria for revenue recognition have been met, costs incurred are recognized as cost of sales. Cost of sales (exclusive of depreciation and amortization) primarily includes the cost of the hardware purchased from the third parties, the labor costs of those responsible for the software development and project implementation and the applicable share of overhead expense directly related to the execution of services and delivery of projects. The Company’s PRC subsidiary and VIE are subject to business tax on revenues related to certain types of services at various rates. Business tax on revenues earned from provision of services to customers is recorded as an additional item to cost of sales in the same period in which the related revenue is recognized. The Company is responsible for the cost of providing a warranty. In the past warranty costs have been insignificant. (l) Research and development costs Research and development costs include salaries, consultant fees, supplies and materials, as well as costs related to other overhead expenses such as depreciation, facilities, utilities and other R&D departmental expenses. Research and development costs are expensed as incurred in performing research and development activities in accordance with ASC No. 730-10-5, Accounting for Research and Development Costs. (m) Advertising expenses Advertising expenses, which generally represent the cost of promotions to create or stimulate a positive image of the Company or a desire to buy the Company’s products and services, are expensed as incurred. The Company incurred no advertising expenses in each of the periods presented. (n) Share-based compensation Share options granted to employees and independent directors are accounted for under ASC 718, “ Share-Based Payment Restricted stock units (RSUs) are measured based on the fair market value of the underlying stock on the dates of grant. Shares are issued on the vesting dates net of the statutory withholding requirements to be paid by the Company on behalf of its employees. As a result, the actual number of shares issued will be fewer than the actual number of RSUs outstanding. Also, the Company recognizes stock-based compensation using the graded vesting attribution method. (o) Taxation a) Income tax i). The Company is incorporated in the BVI. Under the current law of the BVI, the Company is not subject to tax on income or capital gains. Additionally, upon payments of dividends by the Company to its shareholders, no BVI withholding tax will be imposed. ii). Topsky was incorporated in Singapore and does not conduct any substantial operations of its own. No provision for Singapore profits tax has been made in the financial statements as Topsky has no assessable profits for the years ended September 30, 2017, 2016 and 2015. Additionally, upon payments of dividends by Topsky to its shareholders, no Singapore withholding tax will be imposed. iii). The Company’s PRC subsidiary and VIE, being incorporated in the PRC, are governed by the income tax law of the PRC and is subject to PRC enterprise income tax (“EIT”). Effective from January 1, 2008, the EIT rate of PRC reduced from 33% to 25%, and applies to both domestic and foreign invested enterprises. According to a filing document from Xi’an State Tax authorities of the High-technology zone, Kingtone Information was granted a reduced income tax rate of 15% from January 1, 2008 on the basis of being a high-tech company. In September 2014, Kingtone Information was verified as a “high-technology enterprise” until September 4, 2017, and thereforeit hadbenefited from the preferential tax rate of 15%. From September 5, 2017, income tax rate for Kingtone Information has been 25%.The effective tax rate of Kingtone Information in 2017 was 0% due to the operating loss during the fiscal year of 2017. For the years ended September 30, 2017 2016 2015 PRC federal statutory tax rate 25 % 15 % 15 % Income (Loss) before tax (219 ) (160 ) 1,027 NOL carrying forward 219 160 (1,027 ) Computed expected income tax expense - - - Non-deductible expenses - - - Effect of tax holidays - - - Income tax expenses - - - The tax authority of the PRC conducts periodic and ad hoc tax filing reviews on business enterprises operating in the PRC after those enterprises have completed their relevant tax filings. hence, the Company’s tax filings may not be finalized until after such audit has taken place. The PRC tax authority may take a viewpointon the Company’s tax filings that leads to additional tax liabilities.The loss of $219,000 will becarried forwardfor the next five years. b) Value-added tax and business tax PRC Value-added Tax The Company’s products are only sold in the PRC and therefore are generally subject to a Chinese VAT at a rate of 17%. The VAT may be offset by VAT the Company pays on raw materials and other materials included in the cost of producing its finished products. Revenues derived from any exclusive service projects are subject to a Chinese VAT at a rate of 6%, under a reform programto replace the business tax with VAT in the PRC. This is in parallel to the 17% VAT aforementioned. Furthermore, in either scenario, accrued VAT payablesare subject to a 10%-13% surtax, which includes urban maintenance and construction taxes and additional education fees. PRC Business Tax Revenues from services provided by Kingtone Information are subject to a PRC business tax of 5% for rental revenue and 5% for wireless system solution, with a surtax of 10%-13%. Kingtone Information pays business tax on gross revenues. c) Uncertain tax positions The Company adopted ASC No. 740-10 Income Taxes (p) Comprehensive income Accumulated other comprehensive income, as presented on the accompanying consolidated balance sheets are the cumulative foreign currency translation adjustments. (q) Commitments and contingencies In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business, that cover a wide range of matters, including, among others, government investigations, product and environmental liability, and tax matters. In accordance with ASC No. 450-10, Accounting for Contingencies (r) Fair value measurements The carrying amounts of cash and cash equivalents, accounts receivable from third parties and related parties, amounts due from and due to related parties, accounts payable and other payables approximate their fair values due to their short -term nature. The Company adopted ASC No. 820, Fair Value Measurements and Disclosures ASC No. 820-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and assumptions that market participants would use when pricing the asset or liability. ASC No. 820-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC No. 820-10 establishes three levels of inputs that may be used to measure fair value: Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such asquoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The Company does not have level 2 or level 3 financial assets or liabilities. (s) Segment reporting The Company follows ASC No. 280, Segment Reporting (t) Significant risks Credit risk Financial instruments For the years ended 2017 2016 Financial institutions located in the PRC 396,602 490,819 Financial institutions located in Singapore 504,909 748,517 901,511 1,239,336 Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents, accounts receivable, other receivables and amounts due from related parties. As of September 30,2017 and September 30, 2016, US$396,602 and US$490,819, respectively, were deposited with major financial institutions located in the PRC. As of September 30, 2017 and September 30, 2016, US$504,909 and $748,517, respectively, were deposited with major financial institutions located in Singapore. Historically, deposits in Chinese banks are secure due to the state policy on protecting depositors’ interests. However, China promulgated an Enterprise Bankruptcy Law in August 2006 that came into effect on June 1, 2007, which contains a separate article expressly stating that the State Council may promulgate implementation measures for the bankruptcy of Chinese banks based on the Enterprise Bankruptcy Law. Therefore, under the Enterprise Bankruptcy Law, a Chinese bank may theoretically go into bankruptcy. In addition, since China’s accession to the World Trade Organization in 2001, foreign banks have been gradually permitted to operate in China and have been significant competitors against Chinese banks in many aspects, especially since the opening of the RMB business to foreign banks in late 2006. Therefore, the risk of bankruptcy of those Chinese banks in which the Company has deposits has increased. In the event of bankruptcy of one of the Chinese banks which holds the Company’s deposits, it is unlikely to claim its deposits back in full since it is unlikely to be classified as a secured creditor based on PRC laws. The Company conducts credit evaluations of customers and generally does not require collateral or other security from its customers. The Company establishes an allowance for doubtful accounts primarily based upon the aging of the receivables and factors surrounding the credit risk of specific customers. Business, political and economic risks The Company participates in a relatively young and dynamic industry that is heavily reliant on and also susceptible to complementary and/or competitive technological advancements. The Company believes that changes in any of the following areas could have a material adverse effect on the Company’s future financial position, result of operations or cash flows: (i) Business Risk. Third parties may develop technological or business model innovations that address content delivery requirements in a manner that is, or is perceived to be, equivalent or superior to the Company’s services. If competitors introduce new products or services that compete with, or surpass the quality, price or performance of the Company’s services, the Company may be unable to renew its agreements with existing customers or attract new customers at the prices and levels that allow the Company to generate reasonable rates of return on its investment. (ii) Political, economic and social uncertainties. The Company’s operations could be adversely affected by significant political, economic and social uncertainties in the PRC. Although the PRC government has been pursuing economic reform policies for more than 20 years, no assurance can be given that the PRC government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption or unforeseen circumstances affecting the PRC political, economic and social conditions. There is also no guarantee that the PRC government’s pursuit of economic reforms will be consistent or effective. (iii) Regulatory restrictions. The applicable PRC laws, rules and regulations currently prohibit foreign ownership of companies that provide content and application delivery services. Accordingly, the Company’s subsidiary, Softech, is currently ineligible to apply for the required licenses for providing content and application delivery services in China. As a result, the Company operates its business in the PRC through its VIE, which holds the licenses and permits that are required to provide content and application delivery services in the PRC. The PRC Government may also choose at any time to block access to the Company’s customers’ content which could also materially impact the Company’s ability to generate revenue. Foreign currency risk A majority of the Company’s sales and expenses transactions and a significant portion of the Company’s assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC). Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or any other China foreign exchange regulatory body, which require certain supporting documentation in order to affect the remittance. In addition, any significant revaluation of RMB may have a material adverse effect on our financial condition. For example, starting from the second half year of 2016, RMB started to depreciate vs. U.S. dollars and the trend continued in the beginning of year 2017, which caused our assets depreciated accordingly while we translated our balance sheet from RMB into U.S. dollars. Revenue for the wholeyearas well as net income were negatively impacted by such RMB depreciation. (u) Earnings per share (“EPS”) EPS is calculated in according with ASC No. 260, Earning per share (v) In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605)”, and requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date” (“ASU 2015-14”) in August 2015. The amendments in ASU 2015-14 defer the effective date of ASU 2014-09. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. Further to ASU 2014-09 and ASU 2015-14, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” (“ASU 2016-08”) in March 2016, ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” (“ASU 2016-10”) in April 2016, ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”), and ASU No. 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers” (“ASU 2016-20”), respectively. The amendments in ASU 2016-08 clarify the implementation guidance on principal versus agent considerations, including indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. ASU 2016-10 clarifies guidelines related to identifying performance obligations and licensing implementation guidance contained in the new revenue recognition standard. The updates in ASU 2016-10 include targeted improvements based on input the FASB received from the Transition Resource Group for Revenue Recognition and other stakeholders. It seeks to proactively address areas in which diversity in practice potentially could arise, as well as to reduce the cost and complexity of applying certain aspects of the guidance both at implementation and on an ongoing basis. ASU 2016-12 addresses narrow-scope improvements to the guidance on collectability, non-cash consideration, and completed contracts at transition. Additionally, the amendments in this ASU provide a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. The amendments in ASU 2016-20 represents changes to make minor corrections or minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. The effective date and transition requirements for ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20 are the same as ASU 2014-09. We do not expect the adoption of ASU 2014-09, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20 to have a material impact on our consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”). The amendments in this update require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee). The amendments in this update also require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition, the amendments in this update eliminate the requirement for to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public entities. For public business entities, the amendments in ASU 2016-01 are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Except for the early application guidance discussed in ASU 2016-01, early adoption of the amendments in this update is not permitted. We do not expect the adoption of ASU 2016-01 to have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The amendments in this update create Topic 842, Leases, and supersede the leases requirements in Topic 840, Leases. Topic 842 specifies the accounting for leases. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. The main difference between Topic 842 and Topic 840 is the recognition of lease assets and lease liabilities for those leases classified as operating leases under Topic 840. Topic 842 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous leases guidance. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model in Topic 842, the effect of leases in the statement of comprehensive income and the statement of cash flows is largely unchanged from previous GAAP. The amendments in ASU 2016-02 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years for public business entities. Early application of the amendments in ASU 2016-02 is permitted. We are currently evaluating the impact of the adoption of ASU 2016-02 on our consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): “Classification of Certain Cash Receipts and Cash Payments”, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments provide guidance on the following nine specific cash flow issues: (1) Debt Prepayment or Debt Extinguishment Costs; (2) Settlement of Z |
Variable Interest Entities
Variable Interest Entities | 12 Months Ended |
Sep. 30, 2017 | |
Variable Interest Entities [Abstract] | |
VARIABLE INTEREST ENTITIES | NOTE 4. VARIABLE INTEREST ENTITIES Since the inception of Kingtone Wireless on October 27, 2009, the controlling shareholders of Kingtone Wireless have also owned more than 50% of Kingtone Information since its inception on December 28, 2001. Mr. Tao Li, the controlling shareholder of Kingtone Information, obtained beneficial ownership and the right to acquire a majority of the outstanding shares of Kingtone Wireless pursuant to that certain Term Sheet, dated October 27, 2009, by and between certain shareholders of Kingtone Information (including Mr. Li) and Ms. Sha Li, the sole shareholder of Kingtone Wireless at such time (the “Term Sheet”). Such parties subsequently entered into Call Option Agreements dated December 15, 2009 upon the terms and conditions set forth in the Term Sheet. On December 15, 2009, Kingtone Wireless through its subsidiary Softech entered into a series of agreements (the “Restructuring Agreements”) with Kingtone Information to qualify Kingtone Information as a VIE and to meet foreign ownership limitations established by the PRC (the “Reorganization”). The Restructuring Agreements are as follows: Entrusted Management Agreement Pursuant to the terms of a certain Entrusted Management Agreement dated December 15, 2009 among Kingtone Information, Softech and the shareholders of Kingtone Information (the “Entrusted Management Agreement”), Kingtone Information and its shareholders agreed to entrust the operations and management of its business to Softech. According to the Entrusted Management Agreement, Softech possesses the full and exclusive right to manage Kingtone Information’s operations, assets and personnel, has the right to control all of Kingtone Information’s cash flows through an entrusted bank account, is entitled to Kingtone Information’s net profits as a management fee, is obligated to pay all of Kingtone Information’s payables and loan payments, and bears all losses of Kingtone Information. The Entrusted Management Agreement will remain in effect until (i) the parties mutually agree to terminate the agreement; (ii) the dissolution of Kingtone Information or (iii) Softech acquires all of the assets or equity of Kingtone Information (as more fully described below under “Exclusive Option Agreement”). Exclusive Technology Service Agreement Pursuant to the terms of a certain Exclusive Technology Service Agreement dated December 15, 2009 between Kingtone Information and Softech (the “Exclusive Technology Services Agreement”), Softech is the exclusive technology services provider to Kingtone Information. Kingtone Information agrees to pay Softech all fees payable for technology services prior to making any payments under the Entrusted Management Agreement. Any payment from Kingtone Information to Softech must comply with applicable Chinese laws. Further, the parties agree that Softech shall retain sole ownership of all intellectual property developed in connection with providing technology services to Kingtone Information. The Exclusive Technology Services Agreement shall remain in effect until (i) the parties mutually agree to terminate the agreement; (ii) the dissolution of Kingtone Information or (iii) Softech acquires Kingtone Information (as more fully described below under “Exclusive Option Agreement”). Shareholders’ Voting Proxy Agreement Pursuant to the terms of a certain Shareholders’ Voting Proxy Agreement dated December 15, 2009, by and among Softech and the shareholders of Kingtone Information (the “Shareholders’ Voting Proxy Agreement”), each of the shareholders of Kingtone Information irrevocably appoints Softech as their proxy to exercise on each of such shareholder’s behalf all of their voting rights as shareholders, pursuant to PRC law and the Articles of Association of Kingtone Information, including the appointment and election of directors of Kingtone Information. Softech agrees that it shall maintain a board of directors, the composition of which will be the members of the board of directors of Kingtone Wireless, except those directors that are employed solely for the purpose of satisfying listing or financing requirements of Kingtone Wireless. The Shareholders’ Voting Proxy Agreement will remain in effect until Softech acquires all of the assets or equity of Kingtone Information. Exclusive Option Agreement Pursuant to the terms of a certain Exclusive Option Agreement, dated December 15, 2009, by and among Softech, Kingtone Information and the shareholders of Kingtone Information (the “Exclusive Option Agreement”), the shareholders of Kingtone Information granted Softech an irrevocable and exclusive purchase option (the “Option”) to acquire Kingtone Information’s equity interests and/or remaining assets, but only to the extent that the acquisition does not violate limitations imposed by PRC law on such transactions. As discussed above, current PRC law does not allow foreigners to hold equity interests in a PRC entity that engages in business dealings with classified government information. Accordingly, the Option is exercisable at any time at Softech’s discretion so long as such exercise and subsequent acquisition of Kingtone Information does not violate PRC law. The consideration for the exercise of the Option is to be determined by the parties and memorialized in the future by definitive agreements setting forth the kind and value of such consideration. To the extent Kingtone Information shareholders receive any of such consideration, the Option requires them to transfer (and not retain) the same to Kingtone Information or Softech. The Exclusive Option Agreement may be terminated by mutual agreement or by 30 days written notice by Softech. Equity Pledge Agreement Pursuant to the terms of a certain Equity Pledge Agreement, dated December 15, 2009, by and among Softech and the shareholders of Kingtone Information (the “Pledge Agreement”), the shareholders of Kingtone Information pledge all of their equity interests in Kingtone Information, including the proceeds thereof, to guarantee all of Softech’s rights and benefits under the Entrusted Management Agreement, the Exclusive Technology Service Agreement, the Shareholders’ Voting Proxy Agreement and the Exclusive Option Agreement. Prior to termination of the Pledge Agreement, the pledged equity interests cannot be transferred without Softech’s prior written consent. The Pledge Agreement may be terminated only by written agreement of the parties. As a result of these contractual arrangements, Kingtone Wireless is able to exercise control over Kingtone Information and is entitled to substantially all of the economic benefits of Kingtone Information through its subsidiary, Softech. Therefore, Kingtone Wireless had consolidated Kingtone Information’s financial statements in accordance with ASC 810-10 (“ Consolidation of Variable Interest Entities The following financial statement amounts and balances of the VIE were included in the accompanying consolidated financial statements as of and for the years ended September 30, 2017 and 2016: As of September 30, 2017 2016 US$(’000) US$(’000) ASSETS Current assets Cash and cash equivalents $ 397 $ 491 Accounts and notes receivable, net of allowance 3,399 4,243 Unbilled revenue 677 385 Amounts due from related companies 6,986 6,152 Inventories 45 90 Other receivables and prepayments 114 95 Total Current Assets 11,618 11,456 Property and equipment, net 10,370 10,863 Intangible assets 509 527 Total Assets $ 22,497 $ 22,846 LIABILITIES Current liabilities Accounts payable $ 917 $ 1,277 Advances from customers 368 381 Other payables and accruals 42 96 Taxes payable 1,278 1,406 Amounts due to related party - Dividend payable 777 775 Total Current Liabilities 3,382 3,935 Total Liabilities $ 3,382 $ 3,935 For the years ended September 30, 2017 2016 2015 US$(’000) US$(’000) US$(’000) Revenue $ 173 $ 1,192 $ 8,819 Net Income $ 27 $ 299 $ 1,527 Parent-only Schedule The management believes Schedule I (Condensed Financial Information of Registrant) is not required because the amount of restricted net assets of our PRC subsidiaries and VIEs as a result of the statutory reserve required to be maintained was $2.5 million (or 10% of the Company’s total consolidated net assets as of September 30, 2017) which is less than 25%.Therefore, the Company determined the parent company schedule information is not required to be presented under Rule 5-04 of Regulation S-X. One of our wholly owned subsidiaries and the VIE are corporations incorporated under the laws of the PRC and subject to the PRC laws and regulations. Relevant PRC laws and regulations permit PRC companies to pay dividends only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The Company’s subsidiary and VIE in China are required to make appropriations to certain non-distributable reserve funds. In accordance with the laws applicable to China’s Foreign-Invested Enterprises (“FIEs”), the Company’s subsidiaries must make appropriations from after-tax profit (as determined under generally accepted accounting principles in the PRC (“PRC GAAP”) to non-distributable reserve funds, including to (i) a general reserve fund, (ii) an enterprise expansion fund and (iii) a staff bonus and welfare fund. At least 10% of after-tax profits calculated in accordance with PRC GAAP is appropriated for the general reserve fund, although such appropriation is not required if the general reserve fund has reached 50% of the registered capital of the Company. Appropriations for the other two reserve funds is at the Company’s discretion. Additionally, the Company’s VIE, in accordance with the Chinese corporate law, must make appropriations from its after-tax profit (as determined under PRC GAAP) to non-distributable reserve funds, including to (i) a statutory surplus fund and (ii) a discretionary surplus fund. At least 10% of the after-tax profits calculated in accordance with PRC GAAP is appropriated for the statutory surplus fund, although appropriation is not required if the reserve fund has reached 50% of the registered capital of the VIE. The general reserve fund and statutory surplus fund are restricted for setting off against losses, expansion of production and operations or increase in registered capital of the respective company. As a result of these PRC laws and regulations, the general reserve, statutory surplus and registered capital of the Company’s PRC subsidiaries and VIE are restricted in terms of being transferred to the Company either in the form of dividends, loans or advances. The amount of such restricted net assets for all PRC subsidiaries and for the VIE was equal to $2.5 million, or 10% of the Company’s total consolidated net assets, as of September 30, 2017. The Company performed an evaluation to identify circumstances where third parties may limit its subsidiaries’ or VIE’s ability to loan, advance or dividend funds to the parent, including review of all loan agreements to which its subsidiaries or VIE is a party. The Company did not find such restrictions contained in the agreements. There are no other specific third party restrictions on the ability of the Company’s subsidiary or VIE to transfer funds outside of the entity. As a result, there are no other restricted net assets as such term is defined under Rule 4-08(e) (3) of Regulation S-X. |
Accounts and Notes Receivable,
Accounts and Notes Receivable, Net | 12 Months Ended |
Sep. 30, 2017 | |
Accounts and Notes Receivable, Net [Abstract] | |
ACCOUNTS AND NOTES RECEIVABLE, NET | NOTE 5. ACCOUNTS AND NOTES RECEIVABLE NET Accounts and notes receivable and allowance for doubtful accounts consisted of the following: As of September 30, As of September 30, US$(’000) US$(’000) Accounts receivable $ 3,601 $ 4,595 Less: allowance for doubtful accounts (277 ) (352 ) Accounts receivable, net 3,324 4,243 Notes receivable 75 Total accounts and notes receivable $ 3,399 $ 4,243 An analysis of allowance for the doubtful accounts is as follows: As of September 30, As of September 30, US$(’000) US$(’000) Balance at the beginning of the year $ (352 ) $ (369 ) Bad debt expense 75 8 Write offs - 9 Balance at the end of the year $ (277 ) $ (352 ) For the year ended September 30, 2017, the Company made US$0.3 million allowance for doubtful accounts and charged such accounts to bad debt expenses since these accounts receivable was non-collectible. For the year ended September 30, 2016, the Company had made US$0.4 million allowance for doubtful accounts and charged such accounts to bad debt expenses since these accounts receivable were non-collectible. The Company had$75,000 notes receivable for the year ended September 30, 2017 and there were no notes receivable for the year ended September 30, 2016. As of September 30, 2017 and 2016, all accounts and notes receivable were due from third party customers. Any additions, deductions and amounts recovered of the Company’s allowance for doubtful accounts are recorded within general and administration expenses for the respective periods. |
Amounts Due from Related Compan
Amounts Due from Related Companies | 12 Months Ended |
Sep. 30, 2017 | |
Amounts Due from Related Companies/ Related Party Transactions [Abstract] | |
AMOUNTS DUE FROM RELATED COMPANIES | NOTE 6. AMOUNTS DUE FROM RELATED COMPANIES Amounts due from related companies consisted of the following: As of September 30, As of September 30, US$(’000) US$(’000) Shaanxi Tech Team Jinong Humid Acid Product Co., Ltd $ 450 $ 44 Xi’an Tech Team Investment Holdings (Group) Co., Ltd. 1,827 1,823 Xi’an Xinrong Engineering and Industry (Group) Co., Ltd 4,296 4,285 900LH.com Food Co., Ltd. 165 - Others 248 - Total $ 6,986 $ 6,152 All the entities referred to above are indirectly owned and controlled by Tao Li, Chairman of the Company. The Company provided short-term financing to such parties. As of September 30, 2017, we had an outstanding loan of approximately $0.5 million to Shaanxi Tech Team Jinong Humid Acid Product Co., Ltd, which was indirectly owned and controlled by Tao Li, Chairman of the Company.The largest amount of the outstanding loan was $83,000 during the past three years. The loan was an interest-free unsecured rental expense, payable on demand. As of September 30, 2017, we had an outstanding loan of approximately $1.8 million to Xi’an Tech Team Investment Holdings (Group) Co., Ltd, which is 66% indirectly owned and controlled by Tao Li, Chairman of the Company. The largest amount of the outstanding loan was $1.2 million during the past three years. This loan was made under an unsecured verbal agreement for a term of five years, beginning on December 28, 2014 , and the interest rate was 4.75%, the same as the 3 to 5 years interest rate of the central bank. On November 1, 2013, and on August 10, 2016, the Company made loans to Xi’an Xinrong Engineering and Industry (Group) Co., Ltd (“Xinrong”), which is 74% indirectly owned and controlled by Tao Li, Chairman of the Company, pursuant to which the Company provided $1.8 million and $2.7 million to Xinrong for its normal business operations. The largest amount of the outstanding loan amount since the loan was made (which was also the amount outstanding as of September 30, 2017) was $1.8 million and $2.7 million, respectively. The unsecured loans have a three-year term and a five-year term, respectively , and the interest rate was 4.75%, the same as the 3 to 5 years interest rate of the central bank. |
Inventories
Inventories | 12 Months Ended |
Sep. 30, 2017 | |
Inventories [Abstract] | |
INVENTORIES | NOTE 7. INVENTORIES Inventories consisted of the following: As of September 30, As of September 30, US$(’000) US$(’000) Raw material $ - $ - Finished goods 45 45 Project-in-progress - 45 Total $ 45 $ 90 The Company reviews its inventories periodically for possible obsolete or damaged goods and to determine if any allowance is necessary for potential obsolescence. As of September 30, 2017, the Company made approximately $0.3 million allowance for obsolete inventory. There was no allowance for inventory as of September 30, 2016. |
Other Receivables and Prepaymen
Other Receivables and Prepayments | 12 Months Ended |
Sep. 30, 2017 | |
Other Receivables and Prepayments [Abstract] | |
OTHER RECEIVABLES AND PREPAYMENTS | NOTE 8. OTHER RECEIVABLES AND PREPAYMENTS Other receivables and prepayments consisted of the following: As of September 30, As of September 30, US$(’000) US$(’000) Advances to employees $ - $ 130 Deposits on projects 86 22 Prepayment to suppliers 29 24 Others - 49 Total $ 115 $ 225 |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Sep. 30, 2017 | |
Property and Equipment, Net [Abstract] | |
PROPERTY AND EQUIPMENT, NET | NOTE 9. PROPERTY AND EQUIPMENT, NET Property and equipment consisted of the following: As of September 30, As of September 30, US$(’000) US$(’000) Buildings and improvements $ 14,237 $ 14,204 Vehicles 379 378 Other equipment and devices 327 296 Total property and equipment 14,943 14,878 Less: accumulated depreciation (4,573 ) (4,016 ) Property and equipment, net $ 10,370 $ 10,863 For the years ended September 30, 2017, 2016 and 2015, depreciation expenses were US$545,803, US$534,377 and US$615,000, respectively. |
Intangible Assets, Net
Intangible Assets, Net | 12 Months Ended |
Sep. 30, 2017 | |
Intangible Assets, Net [Abstract] | |
INTANGIBLE ASSETS, NET | NOTE 10. INTANGIBLE ASSETS, NET The intangible assets consisted of the following: As of September 30, As of September 30, US$(’000) US$(’000) Land-use rights $ 637 $ 636 Less: accumulated amortization (128 ) (109 ) Intangible assets, net $ 509 $ 527 Amortization expenses for the years ended September 30, 2017, 2016 and 2015 were US$18,465, US$18,421 and US$19,932 respectively. Estimated amortization expenses relating to the existing intangible assets for the aggregated and each of the next five years and thereafter are as follows: For the years ended US$ (’000) September 30, 2018 $ 20 September 30, 2019 20 September 30, 2020 20 September 30, 2021 20 September 30, 2022 20 Thereafter 447 Total $ 527 |
Accounts Payable
Accounts Payable | 12 Months Ended |
Sep. 30, 2017 | |
Accounts Payable/Other Payables and Accruals [Abstract] | |
ACCOUNTS PAYABLE | NOTE 11. ACCOUNTS PAYABLE Accounts payable consisted of the following: As of September 30, As of September 30, US$(’000) US$(’000) Payable to third-party suppliers $ 917 $ 1,277 $ 917 $ 1,277 The decreased in accounts payable was primarily due to the decreased amount of inventory purchase, which was result of fewer new projects signed during the year ended September 30, 2017. |
Advance from Customers
Advance from Customers | 12 Months Ended |
Sep. 30, 2017 | |
Advance from Customers [Abstract] | |
ADVANCE FROM CUSTOMERS | NOTE 12. ADVANCE FROM CUSTOMERS Advances from customers consisted of the following: As of September 30, As of September 30, US$(’000) US$(’000) Advance from third-party customers $ 368 $ 381 $ 368 $ 381 |
Other Payables and Accruals
Other Payables and Accruals | 12 Months Ended |
Sep. 30, 2017 | |
Accounts Payable/Other Payables and Accruals [Abstract] | |
OTHER PAYABLES AND ACCRUALS | NOTE 13. OTHER PAYABLES AND ACCRUALS Other payables and accruals consisted of the following: As of September 30, As of September 30, US$(’000) US$(’000) Accrued employee benefits $ 42 $ 44 Other payables 100 152 Total $ 142 $ 195 |
Taxes Payable
Taxes Payable | 12 Months Ended |
Sep. 30, 2017 | |
Taxes Payable [Abstract] | |
TAXES PAYABLE | NOTE 14. TAXES PAYABLE Taxes payable consisted of the following: As of September 30, As of September 30, US$(’000) US$(’000) Enterprise income tax payable $ 319 $ 319 Individual income tax 498 497 Other taxes payable 461 590 Total $ 1,278 $ 1,406 |
Dividends Payable
Dividends Payable | 12 Months Ended |
Sep. 30, 2017 | |
Dividends Payable [Abstract] | |
DIVIDENDS PAYABLE | NOTE 15. DIVIDENDS PAYABLE As of September 30, As of September 30, US$(’000) US$(’000) Dividend due to shareholders $ 777 $ 775 $ 777 $ 775 In fiscal year 2009, the shareholders of Kingtone Information made a resolution to distribute US$4,096,000 to all shareholders in proportion to their shareholding percentage. In fiscal year 2010, two shareholders received their dividend payment. The balance represents outstanding unpaid dividends to the remaining shareholders. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Sep. 30, 2017 | |
Amounts Due from Related Companies/ Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 16. RELATED PARTY TRANSACTIONS 1. Office Rental For the year ended September 30, 2017, Kingtone Information leased its self-owned office space at 3/F, Area A, Block A, No. 18 South Taibai Road, Xi’an 710065, People’s Republic of China with Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd. (“Jinong”), a wholly-owned subsidiary of China Green Agriculture, Inc. (“CGA”)starting from July 1, 2010.Our Chairman Tao Li is also Chairman and President of CGA. The monthly rent was US$3,867(RMB24, 480) for a two-year term starting from July 1, 2012 to June 30, 2014. From July 1, 2014 to June 29, 2016, the monthly rent was US$3,970 (RMB24, 480). On June 29, 2016, the lease was renewed with Jinong for a monthly rent of US$3,679 (RMB24, 480)for another two-year term beginning July 1, 2016. For the years ended September 30, 2017 2016 2015 US$(’000) US$(’000) US$(’000) Total rental income $ 44,145 $ 44,972 $ 44,852 The Company’s Beijing office is located in two Suites (2208 and 2209) at Building 16, An Hui Dong Li, Chaoyang District, Beijing. It covers a combined total floor space of 184.8 square meters. Tao Li owns this space and allows the Company to use it for no consideration for an unspecified term. 2. Short-Term Loans The short-term loans between the Company and its related parties are disclosed under Note 6 to the consolidated financial statements herein. 3. Long-Term Loans The long-term loans between the Company and its related parties are disclosed under Note 6 to the consolidated financial statements herein. |
Major Customers and Vendors
Major Customers and Vendors | 12 Months Ended |
Sep. 30, 2017 | |
Major Customers and Vendors [Abstract] | |
MAJOR CUSTOMERS AND VENDORS | NOTE 17. MAJOR CUSTOMERS AND VENDORS One customer, Jingban Project, accounted for 0%, 21% and 65% of total sales for the years ended September 30, 2017, 2016 and 2015, respectively. The outstanding accounts receivable balance for this customer was 66%, 49% and 36% of the total accounts receivable balance as of September 30, 2017, 2016 and 2015, respectively. One vendor accounted for over 10% of total purchases for the year ended September 30, 2017, and two vendors accounted for over 10% of total purchases for the years ended September 30, 2016 and 2015, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 18. COMMITMENTS AND CONTINGENCIES The Company had one VIE as of September 30, 2017. In the opinion of the management, (i) the ownership structure of the Company and the VIE are in compliance with existing PRC laws and regulations; (ii) the contractual arrangements with the VIE and its shareholder are valid and binding, and will not result in any violation of PRC laws or regulations currently in effect; and (iii) the Company’s business operations are in compliance with existing PRC laws and regulations in all material respects. However, there are substantial uncertainties regarding the interpretation and application of current and future PRC laws and regulations. Accordingly, the Company cannot be assured that PRC regulatory authorities will not ultimately take a view inconsistent with the Company’s opinion. If the current ownership structure of the Company and its contractual arrangements with the VIE are found to be in violation of any existing or future PRC laws and regulations, the Company may be required to restructure its ownership structure and operations in the PRC to comply with the changing and new PRC laws and regulations and continue consolidation with its VIE. In 2009, each of our executive officers entered into a five-year employment agreement with Softech, our wholly-owned PRC subsidiary. In 2015, certain of our executive officers have renewed the employment agreement for 5 years ending in 2019. Softech may terminate a senior executive officer’s employment for cause, at any time, without prior notice or remuneration, for certain acts of the officer, including, but not limited to, material violation of our regulations, failure to perform agreed-upon duties, embezzlement causing material damage to the Company, and conviction of a crime. A senior executive officer may terminate his or her employment at any time by delivering a 30-day prior written notice. Each senior executive officer is entitled to certain benefits upon termination, including a severance payment equal to a certain specified number of months of his or her salary as of termination, provided that he or she resigns for certain good reasons specified by his or her employment agreement or the relevant rules or Softech terminates his or her employment without “cause”. The details of the terms and annual salary of our executive officers are set forth below: Name Title Annual Base Salary (in RMB with US$ equivalence)) Term Peng Zhang Chief Executive Officer RMB 180,000 $ 28,285 Until 2019 Li Wu Chief Financial Officer RMB 132,000 $ 20,742 Until 2019 Wei Zhang Executive President RMB 120,000 $ 18,857 Until 2019 Xiang Bu Manager RMB 120,000 $ 18,857 Until 2019 Zhenyu Chen Manager RMB 120,000 $ 18,857 Until 2019 |
Share-Based Compensation
Share-Based Compensation | 12 Months Ended |
Sep. 30, 2017 | |
Share-Based Compensation [Abstract] | |
SHARE-BASED COMPENSATION | NOTE 19. SHARE-BASED COMPENSATION In order to attract and retain the best available personnel, provide additional incentives to employees, directors and consultants and promote the success of the Company’s business, its board of directors and its shareholders approved and adopted an Omnibus Incentive Plan in April 2010 (the “2010 Plan”). Under the 2010 Plan, the Company may grant options or restricted awards to its employees, directors and consultants to purchase an aggregate of no more than 1,500,000 ordinary shares (on a pre-Reverse Split basis) of the Company, subject to different vesting requirements. The 2010 Plan is administered by the Compensation Committee (the “Plan Administrator”). The officers of the Company have been authorized and directed by the Plan Administrator to execute Option Agreements with those persons selected by the Plan Administrator and issue ordinary shares of the Company upon exercise of any options so granted pursuant to the terms of an Option Agreement. All options granted under the 2010 Plan have a term of ten years from the option grant date and vest according to the terms and conditions set forth in each grant agreement. On May 14, 2010, the Company granted 180,000 options to a combination of employees and directors of the Company, at an exercise price of US$4.00 on a pre-Reverse Stock Split basis. Restricted stock granted under the 2010 Plan is subject to a different vesting period. On May 14, 2010, the Company granted 100,000 restricted shares to an officer. Of the 100,000 restricted shares 50,000 vested on April 23, 2011 and the remaining 50,000 wereto vest on April 23, 2012. However, the officer resigned on May 31, 2011, and the remaining 50,000 restricted shares to be vested on April 23, 2012, as well as the officer’s unvested options, were forfeited in accordance with their terms. In addition, since the two independent directors Ms. Shi and Mr. Fong resigned on July 11, 2011 and June 24, 2011 respectively, their unvested options were forfeited in accordance with their terms. The reference of number of restrictive shares is on a pre-Reverse Stock Split basis. The Company did not grant any equity awards for the year ended September 30, 2017 and 2016. The Black-Scholes option pricing model was applied in determining the estimated fair value of the options granted to employees and non-employees. The model requires the input of highly subjective assumptions including the estimated expected stock price volatility, the expected price multiple at which employees are likely to exercise share options. For expected volatilities, the Company has made reference to the historical price volatilities of ordinary shares of several comparable companies in the same industry as the Company. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury Bills yield in effect at the time of grant. The Company’s management is ultimately responsible for the determination of the estimated fair value of its ordinary shares. The Company calculated the estimated fair value of the options on the grant date (May 14, 2010) with the following assumptions: May 14, Risk-free interest rates 1.63 % Expected term 10 years Expected volatility 90 % Expected dividend yield 0 % Fair value of underlying ordinary share (per share) (*) US$ 3.94 (*represents initial public offering close price) The Company recognized compensation expense for options granted as general and administrative expense on a straight-line basis for each separately vesting portion of the award (the graded vesting attribution method). The fair value of options on the grant date of May 14, 2010 was $1.89 per share. The share-based compensation expenses for options were US$0, US$0 and US$0 for the years ended September 30, 2017, 2016 and 2015, respectively. The Company records share-based compensation expenses for restricted shares granted to non-employees in exchange for services at fair value as of the grant date, which was $3.94 based on the graded vesting attribution method. The share-based compensation expenses for restricted shares were US$0, US$0 and US$0for the years ended September 30, 2017, 2016 and 2015, respectively. The following table summarizes outstanding options as of September 30, 2017, related weighted average fair value and life information. Options outstanding for all periods have been retroactively restated to reflect the 1-for-10 reverse stock split effected on November 6, 2012: Options Outstanding Options Exercisable Exercise Price Per Share Number Weighted Average Fair Value Weighted Average Remaining Life (Years) Number Exercisable as of September 30, 2017 Weighted Average Exercise Price $ 40.00 12,334 $ 1,89 2.62 12,334 $ 1.89 A summary of option activity under the employee share option plan as of September 30, 2017 and changes during the year then ended is presented as follows: Options Number of Exercise Remaining Aggregated Outstanding as of October 1, 2016 12,334 $ 40.00 3.62 - Granted during the year - - - - Forfeited during the year - - - Outstanding as of September 30, 2017 12,334 $ 40.00 2.62 - |
Statutory Reserves
Statutory Reserves | 12 Months Ended |
Sep. 30, 2017 | |
Statutory Reserves [Abstract] | |
STATUTORY RESERVES | NOTE 20. STATUTORY RESERVES Under PRC law, Softech and Kingtone Information are required to provide for certain statutory reserves, namely a general reserve, an enterprise expansion fund and a staff welfare and bonus fund. The entities are required to allocate at least 10% of their after tax profits on individual company basis as determined under PRC GAAP to the general reserve and have the right to discontinue allocations to the general reserve if such reserve has reached 50% of registered capital. Appropriations to the enterprise expansion fund and staff welfare and bonus fund are at the discretion of the Board of Directors of the entity. These reserves can only be used for specific purposes and are not transferable to the Company in the form of loans, advances, or cash dividends. As of September 30, 2017, the Company had appropriated US$426,051, and as of 2016 and 2015, the Company had appropriated US$444,318 and US$0.00, respectively, in its statutory reserves. |
Ordinary Shares
Ordinary Shares | 12 Months Ended |
Sep. 30, 2017 | |
Ordinary Shares [Abstract] | |
ORDINARY SHARES | NOTE 21. ORDINARY SHARES The Company’s Memorandum and Articles of Association, as amended, authorize the Company to issue 100,000,000 shares of US$0.001 par value per ordinary share. Each ordinary share is entitled to one vote. The holders of ordinary shares are also entitled to receive dividends whenever funds are legally available and when declared by the Board of Directors. The Company had 10,000,000 ordinary shares issued and outstanding prior to the May 2010 public offering. In May 2010, the Company issued 4,000,000 shares of ADSs, representing 4,000,000 ordinary shares, through its depositary, Bank of New York Mellon on the NASDAQ Capital Market, at a consideration of US$4.00 per share for a gross consideration of US$16,000,000. The total direct cost related to this transaction amounted $1,496,000, including underwriter fees, attorney fees, audit fees, etc. In 2011, the Company issued 50,000 shares of ADSs, representing 50,000 ordinary shares, as the restricted shares granted to an employee. Effective November 6, 2012, the Company undertook a combination, or reverse split of the ordinary shares issued by the Company at par value of $0.001 per share such that the Company shall issue one (1) ordinary share (each, a “New Share” and collectively, the“New Shares”) for every ten (10) ordinary shares held by its members (“Old Shares”) (the “Reverse Stock Split”). The par value of each New Share was $0.01, equal to the aggregate of the par value of ten Old Shares combined. The ratio between each American Depositary Share (“ADS”) and its underlying ordinary share post-Reverse Stock Split remains the same, namely, one ADR remains to represent one New Share. As of September 30, 2017, there were 1,405,000 ordinary shares issued and outstanding. |
Earnings Per Ordinary Share
Earnings Per Ordinary Share | 12 Months Ended |
Sep. 30, 2017 | |
Earnings Per Ordinary Share [Abstract] | |
EARNINGS PER ORDINARY SHARE | NOTE 22. EARNINGS PER ORDINARY SHARE For the years ended September 30, 2017 2016 2015 Numerator used in basic net income per share: Net Income (loss) $ (218,486 ) $ (160,000 ) $ 1,027,000 Shares Weighted average number of ordinary shares outstanding 1,405,000 1,405,000 1,405,000 Weighted average number of ordinary shares outstanding used in computing diluted earnings per ordinary share 1,405,000 1,405,000 1,405,000 Loss per ordinary share- basic and diluted $ (0.16 ) $ (0.11 ) $ 0.73 As of September 30, 2017, the Company had zero restricted shares and 12,334 outstanding options that could potentially dilute basic income per share in the future, but which were excluded in the computation of diluted income/loss per share in the periods presented, as their effect would have been anti-dilutive since the grant price of these restricted shares and the exercise price of these option were higher than the average market price during period presented. |
Subsequent Event
Subsequent Event | 12 Months Ended |
Sep. 30, 2017 | |
Subsequent Event [Abstract] | |
SUBSEQUENT EVENT | NOTE 23. SUBSEQUENT EVENT As of January 26, 2018, the related companies had repaid a total of $6,986 thousand to the Company, the balance of current portion and non-current portion of due from related companies was nil after the repayments. On January 25, 2018, the Company executed an Asset Exchange Agreement (“AEA”) with C Media Limited, a corporation organized under the laws of the Cayman Islands (“C Media”), whereby the Company agreed to purchase all the capital stock and equity interests of LK Technology Ltd, together with its wholly-owned subsidiaries MMB Limited and Mobile Media (China) Limited and all respective subsidiaries from C Media in exchange for (i) 185,412,599 ordinary shares of the Company, par value $0.01 per share (“Ordinary Shares”), (ii) 1,000,000 preferred shares of Kingtone (“Preferred Shares”) and (iii) all issued and outstanding capital stock or equity interests of the Company’s subsidiary, Topsky Info-Tech Holdings Pte Ltd., and its wholly-owned subsidiary Xi’an Softech Co., Ltd., including all entities effectively controlled by Xi’an Softech Co., Ltd. through contractual arrangements and variable business entities. In order to consummate the contemplated transactions described above, the Company must obtain shareholders’ consent (i) to authorize 1,000,000 Preferred Shares, (ii) to authorize additional Ordinary Shares so that total authorized Ordinary Shares is equal to 250,000,000 shares, (iii) to list such Ordinary Shares on NASDAQ, and (iv) to approve the transactions contemplated in the Asset Exchange Agreement. Additionally, NASDAQ must approve the contemplated transactions prior to consummation thereof. C Media has the right to terminate the AEA if the closing has not occurred (other than through the failure of C Media to comply fully with its obligations under the AEA) on or before July 31, 2018. |
Summary of Significant Accoun30
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Sep. 30, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of presentation | (a) Basis of presentation The consolidated financial statements of the Company have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements as of September 30, 2017 include the financial statements of Kingtone Wireless, its subsidiaries, and its VIE for which Kingtone Wireless is the primary beneficiary. All inter-company transactions and balances between Kingtone Wireless, its subsidiaries and its VIE are eliminated upon consolidation. In the opinion of management, all adjustments considered necessary for a fair presentation have been included, and such adjustments are of a normal recurring nature. |
Foreign currency transaction | (b) Foreign currency transaction The functional currency of the Company is United States dollars (“US$“or “U.S. dollars”), and the functional currency of Topsky is Singapore dollars (“SG$”). The functional currency of the Company’s PRC subsidiaries, Softech and Kingtone Information, is Renminbi (“RMB”), and PRC is the primary economic environment in which the Company operates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. The resulting exchange differences are included in the determination of net income for the respective periods. For financial reporting purposes, the financial statements of the Company’s PRC subsidiaries which are prepared using RMB, are translated into Company’s reporting currency, the “U.S. dollar”. Assets and liabilities are translated using the exchange rate at each balance sheet date. Revenue and expenses are translated using average rates prevailing during each reporting period, and shareholders’ equity is translated at historical exchange rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income in shareholders’ equity. The exchange rates applied are as follows: 2017 2016 2015 RMB exchange rate at balance sheets dates, 6.6545 6.6702 6.3638 Average RMB exchange rate for each period 6.8122 6.5321 6.1648 No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation. The source of the exchange rates is OANDA (Forex Trading and Exchange Rates Services). |
Use of estimates | (c) Use of estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Management makes these estimates using the best information available at the time the estimates are made. Significant estimates and judgments made by management include: (i) estimates of profits and losses on contracts in process; (ii) accrual of estimated liabilities; and (iii) contingencies and litigation. However, actual results could differ from those estimates. |
Cash and cash equivalents | (d) Cash and cash equivalents Cash and cash equivalents represent cash on hand and deposits held with banks. The Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. |
Accounts and notes receivable | (e) Accounts and notes receivable Accounts and notes receivable are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts as needed. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based on aging data, historical collection experience, customer specific facts and economic conditions. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company did not have any off-balance-sheet credit exposure related to its customers. |
Inventories | (f) Inventories Inventories consist of raw materials, finished goods, and project-in-progress, which include direct labor, direct materials and overhead costs related to projects. Inventories are stated at lower of cost or market value. Cost is determined using first in first out method. Where there is evidence that the market value of inventories, in their disposal in the ordinary course of business, will be less than cost, whether due to physical deterioration, obsolescence, changes in price levels, or other causes, the carrying value of inventories will be written down. |
Property and equipment | (g) Property and equipment The Company states property and equipment at cost less accumulated depreciation. The Company computes depreciation using straight-line method over the estimated useful lives of the assets with 5% residual value. Estimated useful lives of property and equipment: Useful Life Property and improvements 20-35 years Transportation equipment 5 years Office equipment 5 years Furniture 5 years Electronic equipment 3-5 years The Company eliminates the cost and related accumulated depreciation of assets sold or otherwise retired from the accounts and includes any gain or loss in the statement of income. The Company charges maintenance, repairs and minor renewals directly to expenses as incurred, and it capitalizes major additions and renovations to buildings and equipment. |
Impairment of long-lived assets | (h) Impairment of long-lived assets The Company applies the Accounting Standards Codification (“ASC”) No. 360-10 “Property, plant and equipment”, ASC No. 360 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. The Company tests long-lived assets, including property and equipment and intangible assets subject to periodic amortization, for recoverability at least annually or more frequently upon the occurrence of an event or when circumstances indicate that the net carrying amount is greater than its fair value. Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally measured by discounting expected future cash flows as the rate the Company utilizes to evaluate potential investments. The Company estimates fair value based on the information available in making whatever estimates, judgments and projections are considered necessary. No impairment of long-lived assets was recognized for the years ended September 30, 2017 and 2016, respectively. |
Statutory surplus reserve | (i) Statutory surplus reserve The Company is required to set aside 10% of its income after income taxes prepared in accordance with PRC accounting regulations to the statutory surplus reserve until the balance reaches 50% of the paid-in capital or registered capital, after which further appropriation will be at the directors’ recommendation. |
Revenue recognition | (j) Revenue recognition Revenues consist primarily of sales of wireless system software service solutions and other customized software with support contracts. The Company recognizes revenue when (1) pervasive evidence of an arrangement exists, (2) delivery has occurred and customer acceptance is reasonable assured (3) the fee is fixed or determinable, and (4) collectability is probable. The Company generally provides wireless system software service solutions and customized software under short and long-term fixed-price contracts that require significant production and customization. The contract periods generally range from two months to one year in length. The Company recognizes income for these contracts following both the percentage-of-completion method, measured by contract milestones and on the basis of actual costs incurred versus the total estimated contract costs, and on the completed contract method in accordance with the ASC No. 605-35 “ Construction-Type and Certain Production-Type Contracts Provided unapproved change orders or claims occur, in accounting for contracts, the Company follows ASC No. 605-35. The Company will recognize as revenue costs associated with unapproved change orders or claims to the extent it is probable that such claims and change orders will result in additional contract revenue, and the amount of such additional revenue can be reliably estimated. Contract losses are provided for in their entirety in the period that they become known, without regard to the percentage-of-completion. However, the Company has not experienced significant unapproved change orders in the past. The software contracts generally provide for post-contract customer support (“PCS”) for a period of one year from delivery of the software. The value of PCS revenue is not separately reported and is accounted for as part of the entire fee under the contract accounting methods described above since the PCS meets the criteria specified in ASC No. 985-605-25-71 as follows: 1. PCS is included in the total contract price; 2. PCS is for one year or less; 3. estimated costs are insignificant; 4. upgrades and enhancements during the PCS term have historically been and are expected to continue to be minimal and infrequent; and 5. the contract does not include any service elements that are accounted for separately. The Company signed a lease encompassed a 20-year period from January 2014 and to February 2033 with Xi-an sino-german orthopedic hospital to rent their building. The rental will be about $1.2 million for the first year and will yearly increase 2% - 3% based on the rental of previous year in the subsequent years. The Company recognizes revenue on straight line basis. All other services are provided under separate agreements and fee arrangements and the related revenue is recognized over the period the services are provided. Unbilled revenue consists of recognized recoverable costs and accrued profits on contracts for which billings had not been presented to clients as of the balance sheet date. The Company presents all sales revenue net of a value-added tax (“VAT”). The Company recognizes revenue using the fair value of the wireless system software service solutions and other customized software by reference to the retail market price of the wireless system software service solutions and other customized software. These revenues are recorded as “Software Revenue”. |
Cost of Sales | (k) Cost of Sales When the criteria for revenue recognition have been met, costs incurred are recognized as cost of sales. Cost of sales (exclusive of depreciation and amortization) primarily includes the cost of the hardware purchased from the third parties, the labor costs of those responsible for the software development and project implementation and the applicable share of overhead expense directly related to the execution of services and delivery of projects. The Company’s PRC subsidiary and VIE are subject to business tax on revenues related to certain types of services at various rates. Business tax on revenues earned from provision of services to customers is recorded as an additional item to cost of sales in the same period in which the related revenue is recognized. The Company is responsible for the cost of providing a warranty. In the past warranty costs have been insignificant. |
Research and development costs | (l) Research and development costs Research and development costs include salaries, consultant fees, supplies and materials, as well as costs related to other overhead expenses such as depreciation, facilities, utilities and other R&D departmental expenses. Research and development costs are expensed as incurred in performing research and development activities in accordance with ASC No. 730-10-5, Accounting for Research and Development Costs. |
Advertising expenses | (m) Advertising expenses Advertising expenses, which generally represent the cost of promotions to create or stimulate a positive image of the Company or a desire to buy the Company’s products and services, are expensed as incurred. The Company incurred no advertising expenses in each of the periods presented. |
Share-based compensation | (n) Share-based compensation Share options granted to employees and independent directors are accounted for under ASC 718, “ Share-Based Payment Restricted stock units (RSUs) are measured based on the fair market value of the underlying stock on the dates of grant. Shares are issued on the vesting dates net of the statutory withholding requirements to be paid by the Company on behalf of its employees. As a result, the actual number of shares issued will be fewer than the actual number of RSUs outstanding. Also, the Company recognizes stock-based compensation using the graded vesting attribution method. |
Taxation | (o) Taxation a) Income tax i). The Company is incorporated in the BVI. Under the current law of the BVI, the Company is not subject to tax on income or capital gains. Additionally, upon payments of dividends by the Company to its shareholders, no BVI withholding tax will be imposed. ii). Topsky was incorporated in Singapore and does not conduct any substantial operations of its own. No provision for Singapore profits tax has been made in the financial statements as Topsky has no assessable profits for the years ended September 30, 2017, 2016 and 2015. Additionally, upon payments of dividends by Topsky to its shareholders, no Singapore withholding tax will be imposed. iii). The Company’s PRC subsidiary and VIE, being incorporated in the PRC, are governed by the income tax law of the PRC and is subject to PRC enterprise income tax (“EIT”). Effective from January 1, 2008, the EIT rate of PRC reduced from 33% to 25%, and applies to both domestic and foreign invested enterprises. According to a filing document from Xi’an State Tax authorities of the High-technology zone, Kingtone Information was granted a reduced income tax rate of 15% from January 1, 2008 on the basis of being a high-tech company. In September 2014, Kingtone Information was verified as a “high-technology enterprise” until September 4, 2017, and thereforeit hadbenefited from the preferential tax rate of 15%. From September 5, 2017, income tax rate for Kingtone Information has been 25%.The effective tax rate of Kingtone Information in 2017 was 0% due to the operating loss during the fiscal year of 2017. For the years ended September 30, 2017 2016 2015 PRC federal statutory tax rate 25 % 15 % 15 % Income (Loss) before tax (219 ) (160 ) 1,027 NOL carrying forward 219 160 (1,027 ) Computed expected income tax expense - - - Non-deductible expenses - - - Effect of tax holidays - - - Income tax expenses - - - The tax authority of the PRC conducts periodic and ad hoc tax filing reviews on business enterprises operating in the PRC after those enterprises have completed their relevant tax filings. hence, the Company’s tax filings may not be finalized until after such audit has taken place. The PRC tax authority may take a viewpointon the Company’s tax filings that leads to additional tax liabilities.The loss of $219,000 will becarried forwardfor the next five years. b) Value-added tax and business tax PRC Value-added Tax The Company’s products are only sold in the PRC and therefore are generally subject to a Chinese VAT at a rate of 17%. The VAT may be offset by VAT the Company pays on raw materials and other materials included in the cost of producing its finished products. Revenues derived from any exclusive service projects are subject to a Chinese VAT at a rate of 6%, under a reform programto replace the business tax with VAT in the PRC. This is in parallel to the 17% VAT aforementioned. Furthermore, in either scenario, accrued VAT payablesare subject to a 10%-13% surtax, which includes urban maintenance and construction taxes and additional education fees. PRC Business Tax Revenues from services provided by Kingtone Information are subject to a PRC business tax of 5% for rental revenue and 5% for wireless system solution, with a surtax of 10%-13%. Kingtone Information pays business tax on gross revenues. c) Uncertain tax positions The Company adopted ASC No. 740-10 Income Taxes |
Comprehensive income | (p) Comprehensive income Accumulated other comprehensive income, as presented on the accompanying consolidated balance sheets are the cumulative foreign currency translation adjustments. |
Commitments and contingencies | (q) Commitments and contingencies In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business, that cover a wide range of matters, including, among others, government investigations, product and environmental liability, and tax matters. In accordance with ASC No. 450-10, Accounting for Contingencies |
Fair value measurements | (r) Fair value measurements The carrying amounts of cash and cash equivalents, accounts receivable from third parties and related parties, amounts due from and due to related parties, accounts payable and other payables approximate their fair values due to their short -term nature. The Company adopted ASC No. 820, Fair Value Measurements and Disclosures ASC No. 820-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and assumptions that market participants would use when pricing the asset or liability. ASC No. 820-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC No. 820-10 establishes three levels of inputs that may be used to measure fair value: Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such asquoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The Company does not have level 2 or level 3 financial assets or liabilities. |
Segment reporting | (s) Segment reporting The Company follows ASC No. 280, Segment Reporting |
Significant risks | (t) Significant risks Credit risk Financial instruments For the years ended 2017 2016 Financial institutions located in the PRC 396,602 490,819 Financial institutions located in Singapore 504,909 748,517 901,511 1,239,336 Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents, accounts receivable, other receivables and amounts due from related parties. As of September 30,2017 and September 30, 2016, US$396,602 and US$490,819, respectively, were deposited with major financial institutions located in the PRC. As of September 30, 2017 and September 30, 2016, US$504,909 and $748,517, respectively, were deposited with major financial institutions located in Singapore. Historically, deposits in Chinese banks are secure due to the state policy on protecting depositors’ interests. However, China promulgated an Enterprise Bankruptcy Law in August 2006 that came into effect on June 1, 2007, which contains a separate article expressly stating that the State Council may promulgate implementation measures for the bankruptcy of Chinese banks based on the Enterprise Bankruptcy Law. Therefore, under the Enterprise Bankruptcy Law, a Chinese bank may theoretically go into bankruptcy. In addition, since China’s accession to the World Trade Organization in 2001, foreign banks have been gradually permitted to operate in China and have been significant competitors against Chinese banks in many aspects, especially since the opening of the RMB business to foreign banks in late 2006. Therefore, the risk of bankruptcy of those Chinese banks in which the Company has deposits has increased. In the event of bankruptcy of one of the Chinese banks which holds the Company’s deposits, it is unlikely to claim its deposits back in full since it is unlikely to be classified as a secured creditor based on PRC laws. The Company conducts credit evaluations of customers and generally does not require collateral or other security from its customers. The Company establishes an allowance for doubtful accounts primarily based upon the aging of the receivables and factors surrounding the credit risk of specific customers. Business, political and economic risks The Company participates in a relatively young and dynamic industry that is heavily reliant on and also susceptible to complementary and/or competitive technological advancements. The Company believes that changes in any of the following areas could have a material adverse effect on the Company’s future financial position, result of operations or cash flows: (i) Business Risk. Third parties may develop technological or business model innovations that address content delivery requirements in a manner that is, or is perceived to be, equivalent or superior to the Company’s services. If competitors introduce new products or services that compete with, or surpass the quality, price or performance of the Company’s services, the Company may be unable to renew its agreements with existing customers or attract new customers at the prices and levels that allow the Company to generate reasonable rates of return on its investment. (ii) Political, economic and social uncertainties. The Company’s operations could be adversely affected by significant political, economic and social uncertainties in the PRC. Although the PRC government has been pursuing economic reform policies for more than 20 years, no assurance can be given that the PRC government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption or unforeseen circumstances affecting the PRC political, economic and social conditions. There is also no guarantee that the PRC government’s pursuit of economic reforms will be consistent or effective. (iii) Regulatory restrictions. The applicable PRC laws, rules and regulations currently prohibit foreign ownership of companies that provide content and application delivery services. Accordingly, the Company’s subsidiary, Softech, is currently ineligible to apply for the required licenses for providing content and application delivery services in China. As a result, the Company operates its business in the PRC through its VIE, which holds the licenses and permits that are required to provide content and application delivery services in the PRC. The PRC Government may also choose at any time to block access to the Company’s customers’ content which could also materially impact the Company’s ability to generate revenue. Foreign currency risk A majority of the Company’s sales and expenses transactions and a significant portion of the Company’s assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC). Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or any other China foreign exchange regulatory body, which require certain supporting documentation in order to affect the remittance. In addition, any significant revaluation of RMB may have a material adverse effect on our financial condition. For example, starting from the second half year of 2016, RMB started to depreciate vs. U.S. dollars and the trend continued in the beginning of year 2017, which caused our assets depreciated accordingly while we translated our balance sheet from RMB into U.S. dollars. Revenue for the wholeyearas well as net income were negatively impacted by such RMB depreciation. |
Earnings per share ("EPS") | (u) Earnings per share (“EPS”) EPS is calculated in according with ASC No. 260, Earning per share |
Recent Accounting Pronouncements | (v) In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605)”, and requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date” (“ASU 2015-14”) in August 2015. The amendments in ASU 2015-14 defer the effective date of ASU 2014-09. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. Further to ASU 2014-09 and ASU 2015-14, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” (“ASU 2016-08”) in March 2016, ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” (“ASU 2016-10”) in April 2016, ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”), and ASU No. 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers” (“ASU 2016-20”), respectively. The amendments in ASU 2016-08 clarify the implementation guidance on principal versus agent considerations, including indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. ASU 2016-10 clarifies guidelines related to identifying performance obligations and licensing implementation guidance contained in the new revenue recognition standard. The updates in ASU 2016-10 include targeted improvements based on input the FASB received from the Transition Resource Group for Revenue Recognition and other stakeholders. It seeks to proactively address areas in which diversity in practice potentially could arise, as well as to reduce the cost and complexity of applying certain aspects of the guidance both at implementation and on an ongoing basis. ASU 2016-12 addresses narrow-scope improvements to the guidance on collectability, non-cash consideration, and completed contracts at transition. Additionally, the amendments in this ASU provide a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. The amendments in ASU 2016-20 represents changes to make minor corrections or minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. The effective date and transition requirements for ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20 are the same as ASU 2014-09. We do not expect the adoption of ASU 2014-09, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20 to have a material impact on our consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”). The amendments in this update require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee). The amendments in this update also require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition, the amendments in this update eliminate the requirement for to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public entities. For public business entities, the amendments in ASU 2016-01 are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Except for the early application guidance discussed in ASU 2016-01, early adoption of the amendments in this update is not permitted. We do not expect the adoption of ASU 2016-01 to have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The amendments in this update create Topic 842, Leases, and supersede the leases requirements in Topic 840, Leases. Topic 842 specifies the accounting for leases. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. The main difference between Topic 842 and Topic 840 is the recognition of lease assets and lease liabilities for those leases classified as operating leases under Topic 840. Topic 842 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous leases guidance. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model in Topic 842, the effect of leases in the statement of comprehensive income and the statement of cash flows is largely unchanged from previous GAAP. The amendments in ASU 2016-02 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years for public business entities. Early application of the amendments in ASU 2016-02 is permitted. We are currently evaluating the impact of the adoption of ASU 2016-02 on our consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): “Classification of Certain Cash Receipts and Cash Payments”, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments provide guidance on the following nine specific cash flow issues: (1) Debt Prepayment or Debt Extinguishment Costs; (2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; (3) Contingent Consideration Payments Made after a Business Combination; (4)Proceeds from the Settlement of Insurance Claims; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned; (6) Life Insurance Policies; (7) Distributions Received from Equity Method Investees; (8) Beneficial Interests in Securitization Transactions; and (9) Separately Identifiable Cash Flows and Application of the Predominance Principle. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The Company is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures. In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): “Intra-Entity Transfers of Assets Other Than Inventory”. The amendments require an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs and remove the exception to postpone recognition until the asset has been sold to an outside party. The amendments are effective for public business entities for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. For all other entities, the amendments are effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures. Also in October 2016, the FASB issued ASU No. 2016-17, Consolidation (Topic 810): “Interest Held through Related Parties That Are under Common Control”, to provide guidance on the evaluation of whether a reporting entity is the primary beneficiary of a variable interest entity, or VIE by amending how a reporting entity, that is a single decision maker of a VIE, treats indirect interests in that entity held through related parties that are under common control. The amendments are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): “Restricted Cash”(“ASU 2016-18”). ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. ASU 2016-18 will become effective for us beginning April 1, 2018, or fiscal 2019. ASU 2016-18 is required to be applied retrospectively. Upon adoption, amounts described as restricted cash will be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statements of cash flows. In January 2017, the FASB issued Accounting Standards Update No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (ASU 2017-01), which revises the definition of a business and provides new guidance in evaluating when a set of transferred assets and activities is a business. This guidance will be effective for us in the first quarter of 2018 on a prospective basis, and early adoption is permitted. We do not expect the standard to have a material impact on our consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, “Compensation—Stock compensation (Topic 718): Scope of modification accounting” (“ASU 2017-09”). The purpose of the amendment is to clarify which changes to the terms or condition of a share-based payment award require an entity to apply modification accounting. For all entities that offer share based payment awards, ASU 2017-09 are effective for interim and annual reporting periods beginning after December 15, 2017. The Company is currently assessing the impact of ASU 2017-09 on its consolidated financial statements. |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of foreign currency transaction exchange rate | 2017 2016 2015 RMB exchange rate at balance sheets dates, 6.6545 6.6702 6.3638 Average RMB exchange rate for each period 6.8122 6.5321 6.1648 |
Schedule of estimated useful lives of property and equipment | Useful Life Property and improvements 20-35 years Transportation equipment 5 years Office equipment 5 years Furniture 5 years Electronic equipment 3-5 years |
Schedule of income tax expenses | For the years ended September 30, 2017 2016 2015 PRC federal statutory tax rate 25 % 15 % 15 % Income (Loss) before tax (219 ) (160 ) 1,027 NOL carrying forward 219 160 (1,027 ) Computed expected income tax expense - - - Non-deductible expenses - - - Effect of tax holidays - - - Income tax expenses - - - |
Schedules of credit risk | Financial instruments For the years ended 2017 2016 Financial institutions located in the PRC 396,602 490,819 Financial institutions located in Singapore 504,909 748,517 901,511 1,239,336 |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Variable Interest Entities [Abstract] | |
Schedule of variable interest entities | As of September 30, 2017 2016 US$(’000) US$(’000) ASSETS Current assets Cash and cash equivalents $ 397 $ 491 Accounts and notes receivable, net of allowance 3,399 4,243 Unbilled revenue 677 385 Amounts due from related companies 6,986 6,152 Inventories 45 90 Other receivables and prepayments 114 95 Total Current Assets 11,618 11,456 Property and equipment, net 10,370 10,863 Intangible assets 509 527 Total Assets $ 22,497 $ 22,846 LIABILITIES Current liabilities Accounts payable $ 917 $ 1,277 Advances from customers 368 381 Other payables and accruals 42 96 Taxes payable 1,278 1,406 Amounts due to related party - Dividend payable 777 775 Total Current Liabilities 3,382 3,935 Total Liabilities $ 3,382 $ 3,935 For the years ended September 30, 2017 2016 2015 US$(’000) US$(’000) US$(’000) Revenue $ 173 $ 1,192 $ 8,819 Net Income $ 27 $ 299 $ 1,527 |
Accounts and Notes Receivable33
Accounts and Notes Receivable, Net (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Accounts and Notes Receivable, Net [Abstract] | |
Schedule of accounts and notes receivable and allowance for doubtful accounts | As of September 30, As of September 30, US$(’000) US$(’000) Accounts receivable $ 3,601 $ 4,595 Less: allowance for doubtful accounts (277 ) (352 ) Accounts receivable, net 3,324 4,243 Notes receivable 75 Total accounts and notes receivable $ 3,399 $ 4,243 |
Schedule of analysis of allowance for the doubtful accounts | As of September 30, As of September 30, US$(’000) US$(’000) Balance at the beginning of the year $ (352 ) $ (369 ) Bad debt expense 75 8 Write offs - 9 Balance at the end of the year $ (277 ) $ (352 ) |
Amounts Due from Related Comp34
Amounts Due from Related Companies (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Amounts Due from Related Companies/ Related Party Transactions [Abstract] | |
Summary of amounts due from related companies | As of September 30, As of September 30, US$(’000) US$(’000) Shaanxi Tech Team Jinong Humid Acid Product Co., Ltd $ 450 $ 44 Xi’an Tech Team Investment Holdings (Group) Co., Ltd. 1,827 1,823 Xi’an Xinrong Engineering and Industry (Group) Co., Ltd 4,296 4,285 900LH.com Food Co., Ltd. 165 - Others 248 - Total $ 6,986 $ 6,152 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Inventories [Abstract] | |
Schedule of inventories | As of September 30, As of September 30, US$(’000) US$(’000) Raw material $ - $ - Finished goods 45 45 Project-in-progress - 45 Total $ 45 $ 90 |
Other Receivables and Prepaym36
Other Receivables and Prepayments (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Other Receivables and Prepayments [Abstract] | |
Schedule of other receivables and prepayments | As of September 30, As of September 30, US$(’000) US$(’000) Advances to employees $ - $ 130 Deposits on projects 86 22 Prepayment to suppliers 29 24 Others - 49 Total $ 115 $ 225 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Property and Equipment, Net [Abstract] | |
Schedule of property and equipment | As of September 30, As of September 30, US$(’000) US$(’000) Buildings and improvements $ 14,237 $ 14,204 Vehicles 379 378 Other equipment and devices 327 296 Total property and equipment 14,943 14,878 Less: accumulated depreciation (4,573 ) (4,016 ) Property and equipment, net $ 10,370 $ 10,863 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Intangible Assets, Net [Abstract] | |
Schedule of intangible assets | As of September 30, As of September 30, US$(’000) US$(’000) Land-use rights $ 637 $ 636 Less: accumulated amortization (128 ) (109 ) Intangible assets, net $ 509 $ 527 |
Schedule of estimated amortization expense relating to the existing intangible assets | For the years ended US$ (’000) September 30, 2018 $ 20 September 30, 2019 20 September 30, 2020 20 September 30, 2021 20 September 30, 2022 20 Thereafter 447 Total $ 527 |
Accounts Payable (Tables)
Accounts Payable (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Accounts Payable/Other Payables and Accruals [Abstract] | |
Schedule of accounts payable | As of September 30, As of September 30, US$(’000) US$(’000) Payable to third-party suppliers $ 917 $ 1,277 $ 917 $ 1,277 |
Advance from Customers (Tables)
Advance from Customers (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Advance from Customers [Abstract] | |
Schedule of advance from customers | As of September 30, As of September 30, US$(’000) US$(’000) Advance from third-party customers $ 368 $ 381 $ 368 $ 381 |
Other Payables and Accruals (Ta
Other Payables and Accruals (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Accounts Payable/Other Payables and Accruals [Abstract] | |
Schedule of other payables and accruals | As of September 30, As of September 30, US$(’000) US$(’000) Accrued employee benefits $ 42 $ 44 Other payables 100 152 Total $ 142 $ 195 |
Taxes Payable (Tables)
Taxes Payable (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Taxes Payable [Abstract] | |
Schedule of taxes payable | As of September 30, As of September 30, US$(’000) US$(’000) Enterprise income tax payable $ 319 $ 319 Individual income tax 498 497 Other taxes payable 461 590 Total $ 1,278 $ 1,406 |
Dividends Payable (Tables)
Dividends Payable (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Dividends Payable [Abstract] | |
Schedule of dividends payable | As of September 30, As of September 30, US$(’000) US$(’000) Dividend due to shareholders $ 777 $ 775 $ 777 $ 775 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Amounts Due from Related Companies/ Related Party Transactions [Abstract] | |
Schedule of total rental income | For the years ended September 30, 2017 2016 2015 US$(’000) US$(’000) US$(’000) Total rental income $ 44,145 $ 44,972 $ 44,852 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies [Abstract] | |
Schedule of term and annual salary of executive officers | Name Title Annual Base Salary (in RMB with US$ equivalence)) Term Peng Zhang Chief Executive Officer RMB 180,000 $ 28,285 Until 2019 Li Wu Chief Financial Officer RMB 132,000 $ 20,742 Until 2019 Wei Zhang Executive President RMB 120,000 $ 18,857 Until 2019 Xiang Bu Manager RMB 120,000 $ 18,857 Until 2019 Zhenyu Chen Manager RMB 120,000 $ 18,857 Until 2019 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Share-Based Compensation [Abstract] | |
Schedule of estimated fair value of the options on the grant date | May 14, Risk-free interest rates 1.63 % Expected term 10 years Expected volatility 90 % Expected dividend yield 0 % Fair value of underlying ordinary share (per share) (*) US$ 3.94 (*represents initial public offering close price) |
Summary of weighted average fair value and life information, options outstanding | Options Outstanding Options Exercisable Exercise Price Per Share Number Weighted Average Fair Value Weighted Average Remaining Life (Years) Number Exercisable as of September 30, 2017 Weighted Average Exercise Price $ 40.00 12,334 $ 1,89 2.62 12,334 $ 1.89 |
Summary of option activity under the employee share option plan | Options Number of Exercise Remaining Aggregated Outstanding as of October 1, 2016 12,334 $ 40.00 3.62 - Granted during the year - - - - Forfeited during the year - - - Outstanding as of September 30, 2017 12,334 $ 40.00 2.62 - |
Earnings Per Ordinary Share (Ta
Earnings Per Ordinary Share (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Earnings Per Ordinary Share [Abstract] | |
Schedule of earnings per ordinary share | For the years ended September 30, 2017 2016 2015 Numerator used in basic net income per share: Net Income (loss) $ (218,486 ) $ (160,000 ) $ 1,027,000 Shares Weighted average number of ordinary shares outstanding 1,405,000 1,405,000 1,405,000 Weighted average number of ordinary shares outstanding used in computing diluted earnings per ordinary share 1,405,000 1,405,000 1,405,000 Loss per ordinary share- basic and diluted $ (0.16 ) $ (0.11 ) $ 0.73 |
Organization and Principal Ac48
Organization and Principal Activities (Details) - USD ($) $ / shares in Units, $ in Millions | Nov. 06, 2012 | May 14, 2010 | Sep. 30, 2017 | Sep. 30, 2016 |
Organization and Principal Activities [Line Items] | ||||
Price per ADS | $ 4 | |||
Issuance of ordinary shares in form of ADS | 4,000,000 | |||
Proceeds from issuance of shares | $ 14.5 | |||
Entity Incorporation, State Country Name | British Virgin Islands | |||
Entity Incorporation, Date Of Incorporation | Oct. 27, 2009 | |||
Reverse stock split | 1-for-10 | |||
Ordinary share, shares issued | 1,405,000 | 1,405,000 | ||
Ordinary share, shares outstanding | 1,405,000 | 1,405,000 | ||
Before Reverse Stock Split [Member] | ||||
Organization and Principal Activities [Line Items] | ||||
Ordinary share, shares issued | 14,050,000 | |||
Ordinary share, shares outstanding | 14,050,000 | |||
After Reverse Stock Split [Member] | ||||
Organization and Principal Activities [Line Items] | ||||
Ordinary share, shares issued | 1,405,000 | |||
Ordinary share, shares outstanding | 1,405,000 |
Summary of Significant Accoun49
Summary of Significant Accounting Policies (Details) | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 |
Summary of Significant Accounting Policies [Abstract] | |||
RMB exchange rate at balance sheets dates | 6.6545 | 6.6702 | 6.3638 |
Average RMB exchange rate for each period | 6.8122 | 6.5321 | 6.1648 |
Summary of Significant Accoun50
Summary of Significant Accounting Policies (Details 1) | 12 Months Ended |
Sep. 30, 2017 | |
Property and improvements [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Useful Life | 20 years |
Property and improvements [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Useful Life | 35 years |
Transportation equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Useful Life | 5 years |
Office equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Useful Life | 5 years |
Furniture [Member] | |
Property, Plant and Equipment [Line Items] | |
Useful Life | 5 years |
Electronic equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Useful Life | 3 years |
Electronic equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Useful Life | 5 years |
Summary of Significant Accoun51
Summary of Significant Accounting Policies (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
Summary of Significant Accounting Policies [Abstract] | |||
PRC federal statutory tax rate | 25.00% | 15.00% | 15.00% |
Income (Loss) before tax | $ (219) | $ (160) | $ 1,027 |
NOL carrying forward | 219 | 160 | (1,027) |
Computed expected income tax expense | |||
Non-deductible expenses | |||
Effect of tax holidays | |||
Income tax expenses |
Summary of Significant Accoun52
Summary of Significant Accounting Policies (Details 3) - USD ($) | Sep. 30, 2017 | Sep. 30, 2016 |
Capital Requirements on Foreign Financial Institutions [Line Items] | ||
Financial instruments | $ 901,511 | $ 1,239,336 |
PRC [Member] | ||
Capital Requirements on Foreign Financial Institutions [Line Items] | ||
Financial instruments | 396,602 | 490,819 |
Singapore [Member] | ||
Capital Requirements on Foreign Financial Institutions [Line Items] | ||
Financial instruments | $ 504,909 | $ 748,517 |
Summary of Significant Accoun53
Summary of Significant Accounting Policies (Details Textual) - USD ($) | Sep. 05, 2017 | Sep. 04, 2017 | Jan. 31, 2008 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 |
Summary of Significant Accounting Policies (Textual) | ||||||
Percentage of estimated useful lives of assets residual value | 5.00% | |||||
Percentage of discontinue allocations of general reserve on registered capital | 50.00% | |||||
Income tax rate reduced | 15.00% | |||||
Chinese value added tax rate | 17.00% | |||||
Rental revenue tax paid | 5.00% | |||||
Rental agreement description | The Company signed a lease encompassed a 20-year period from January 2014 and to February 2033 with Xi-an sino-german orthopedic hospital to rent their building. The rental will be about $1.2 million for the first year and will yearly increase 2% - 3% based on the rental of previous year in the subsequent years. | |||||
Tax paid in kind of wireless system solution | 5.00% | |||||
Financial instruments | $ 901,511 | $ 1,239,336 | ||||
Tax rate percentage | 25.00% | 0.00% | ||||
Net income (loss) for the year | $ (219,000) | (160,000) | $ 1,027,000 | |||
Chinese business value added tax rate | 6.00% | |||||
Statutory surplus reserve, variations description | The Company is required to set aside 10% of its income after income taxes prepared in accordance with PRC accounting regulations to the statutory surplus reserve until the balance reaches 50% of the paid-in capital or registered capital. | |||||
Preferential tax rate | 15.00% | |||||
Economic reform policies | 20 years | |||||
Minimum [Member] | ||||||
Summary of Significant Accounting Policies (Textual) | ||||||
Accrued value added tax payable | 10.00% | |||||
Tax paid in kind of surtax | 10.00% | |||||
Tax rate percentage | 25.00% | |||||
Maximum [Member] | ||||||
Summary of Significant Accounting Policies (Textual) | ||||||
Accrued value added tax payable | 13.00% | |||||
Tax paid in kind of surtax | 13.00% | |||||
Tax rate percentage | 33.00% | |||||
PRC [Member] | ||||||
Summary of Significant Accounting Policies (Textual) | ||||||
Financial instruments | $ 396,602 | 490,819 | ||||
Singapore [Member] | ||||||
Summary of Significant Accounting Policies (Textual) | ||||||
Financial instruments | $ 504,909 | $ 748,517 |
Variable Interest Entities (Det
Variable Interest Entities (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | ||
Current assets | |||||
Cash and cash equivalents | $ 902 | $ 1,239 | $ 2,743 | $ 4,166 | |
Accounts and notes receivable, net of allowance | [1] | 3,399 | 4,243 | ||
Unbilled revenue | 677 | 385 | |||
Amounts due from related companies | [1] | 819 | 6,152 | ||
Inventories | [1] | 45 | 90 | ||
Other receivables and prepayments | [1] | 115 | 225 | ||
Total Current Assets | 5,568 | 12,334 | |||
Non-current assets | |||||
Property and equipment, net | [1] | 10,370 | 10,863 | ||
Intangible assets | 527 | 509 | |||
Total Assets | 23,001 | 23,724 | |||
Current liabilities | |||||
Accounts payable | [1] | 917 | 1,277 | ||
Advances from customers | [1] | 368 | 381 | ||
Other payables and accruals | [1] | 142 | 195 | ||
Taxes payable | [1] | 1,278 | 1,406 | ||
Amounts due to related party | |||||
Dividend payable | [1] | 777 | 775 | ||
Total Current Liabilities | 3,482 | 4,034 | |||
Total Liabilities | 3,383 | 3,935 | |||
Revenue | 173 | 1,192 | 8,819 | ||
Net Income | (219) | (160) | 1,027 | ||
VIE [Member] | |||||
Current assets | |||||
Cash and cash equivalents | 397 | 491 | |||
Accounts and notes receivable, net of allowance | 3,399 | 4,243 | |||
Unbilled revenue | 677 | 385 | |||
Amounts due from related companies | 6,986 | 6,152 | |||
Inventories | 45 | 90 | |||
Other receivables and prepayments | 114 | 95 | |||
Total Current Assets | 11,618 | 11,456 | |||
Non-current assets | |||||
Property and equipment, net | 10,370 | 10,863 | |||
Intangible assets | 509 | 527 | |||
Total Assets | 22,497 | 22,846 | |||
Current liabilities | |||||
Accounts payable | 917 | 1,277 | |||
Advances from customers | 368 | 381 | |||
Other payables and accruals | 42 | 96 | |||
Taxes payable | 1,278 | 1,406 | |||
Amounts due to related party | |||||
Dividend payable | 777 | 775 | |||
Total Current Liabilities | 3,382 | 3,935 | |||
Total Liabilities | 3,382 | 3,935 | |||
Revenue | 173 | 1,192 | 8,819 | ||
Net Income | $ 27 | $ 299 | $ 1,527 | ||
[1] | All of the VIE's assets can be used to settle obligations of their primary beneficiary. Liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company's general assets (Note 3). |
Variable Interest Entities (D55
Variable Interest Entities (Details Textual) | 12 Months Ended | |
Sep. 30, 2017 | Oct. 27, 2009 | |
Variable Interest Entities [Abstract] | ||
Equity method owned, Percentage | 50.00% | |
Exclusive option agreement termination period | 30 days | |
Description of variable interest entity | The management believes Schedule I (Condensed Financial Information of Registrant) is not required because the amount of restricted net assets of our PRC subsidiaries and VIEs as a result of the statutory reserve required to be maintained was $2.5 million (or 10% of the Company's total consolidated net assets as of September 30, 2017) which is less than 25%. | |
Description of Company's subsidiary and VIE regulations | In accordance with the laws applicable to China's Foreign-Invested Enterprises ("FIEs"), the Company's subsidiaries must make appropriations from after-tax profit (as determined under generally accepted accounting principles in the PRC ("PRC GAAP") to non-distributable reserve funds, including to (i) a general reserve fund, (ii) an enterprise expansion fund and (iii) a staff bonus and welfare fund. At least 10% of after-tax profits calculated in accordance with PRC GAAP is appropriated for the general reserve fund, although such appropriation is not required if the general reserve fund has reached 50% of the registered capital of the Company. Appropriations for the other two reserve funds is at the Company's discretion. Additionally, the Company's VIE, in accordance with the Chinese corporate law, must make appropriations from its after-tax profit (as determined under PRC GAAP) to non-distributable reserve funds, including to (i) a statutory surplus fund and (ii) a discretionary surplus fund. At least 10% of the after-tax profits calculated in accordance with PRC GAAP is appropriated for the statutory surplus fund, although appropriation is not required if the reserve fund has reached 50% of the registered capital of the VIE. The general reserve fund and statutory surplus fund are restricted for setting off against losses, expansion of production and operations or increase in registered capital of the respective company. As a result of these PRC laws and regulations, the general reserve, statutory surplus and registered capital of the Company's PRC subsidiaries and VIE are restricted in terms of being transferred to the Company either in the form of dividends, loans or advances. The amount of such restricted net assets for all PRC subsidiaries and for the VIE was equal to $2.5 million, or 10% of the Company's total consolidated net assets, as of September 30, 2017. |
Accounts and Notes Receivable56
Accounts and Notes Receivable, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
Accounts and Notes Receivable, Net [Abstract] | ||||
Accounts receivable | $ 3,601 | $ 4,595 | ||
Less: allowance for doubtful accounts | 277 | 352 | $ 369 | |
Accounts receivable, net | 3,324 | 4,243 | ||
Notes receivable | 75 | |||
Total accounts and notes receivable | [1] | $ 3,399 | $ 4,243 | |
[1] | All of the VIE's assets can be used to settle obligations of their primary beneficiary. Liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company's general assets (Note 3). |
Accounts and Notes Receivable57
Accounts and Notes Receivable, Net (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Accounts and Notes Receivable, Net [Abstract] | ||
Balance at the beginning of the year | $ (352) | $ (369) |
Bad debt expense | 75 | 8 |
Write offs | 9 | |
Balance at the end of the year | $ (277) | $ (352) |
Accounts and Notes Receivable58
Accounts and Notes Receivable, Net (Details Textual) - USD ($) $ in Thousands | Sep. 30, 2017 | Sep. 30, 2016 |
Accounts and Notes Receivable, Net (Textual) | ||
Notes receivable | $ 75 | |
Allowance for doubtful accounts receivable | $ 300 | $ 400 |
Amounts Due from Related Comp59
Amounts Due from Related Companies (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Sep. 30, 2016 | |
Related Party Transaction [Line Items] | |||
Total | [1] | $ 819 | $ 6,152 |
Shaanxi Tech Team Jinong Humid Acid Product Co., Ltd [Member] | |||
Related Party Transaction [Line Items] | |||
Total | 450 | 44 | |
Xi'an Tech Team Investment Holdings (Group) Co., Ltd. [Member] | |||
Related Party Transaction [Line Items] | |||
Total | 1,827 | 1,823 | |
Xi'an Xinrong Engineering and Industry (Group) Co., Ltd [Member] | |||
Related Party Transaction [Line Items] | |||
Total | 4,296 | 4,285 | |
900LH.com Food Co., Ltd. [Member] | |||
Related Party Transaction [Line Items] | |||
Total | 165 | ||
Others [Member] | |||
Related Party Transaction [Line Items] | |||
Total | $ 248 | ||
[1] | All of the VIE's assets can be used to settle obligations of their primary beneficiary. Liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company's general assets (Note 3). |
Amounts Due from Related Comp60
Amounts Due from Related Companies (Details Textual) - USD ($) $ in Thousands | Aug. 10, 2016 | Nov. 01, 2013 | Sep. 30, 2017 | Sep. 30, 2016 | |
Amounts Due from Related Companies (Textual) | |||||
Outstanding loan | [1] | $ 819 | $ 6,152 | ||
Largest amount of outstanding loan | 6,167 | ||||
Shaanxi Tech Team Jinong Humid Acid Product Co., Ltd [Member] | |||||
Amounts Due from Related Companies (Textual) | |||||
Outstanding loan | 450 | 44 | |||
Largest amount of outstanding loan | 83 | ||||
Xi'an Tech Team Investment Holdings (Group) Co., Ltd. [Member] | |||||
Amounts Due from Related Companies (Textual) | |||||
Outstanding loan | $ 1,827 | 1,823 | |||
Indirectly owned and controlled, percentage | 66.00% | ||||
Largest amount of outstanding loan | $ 1,200 | ||||
Related party, interest rate | 4.75% | ||||
Interest rate term, description | The same as the 3 to 5 years interest rate of the central bank. | ||||
Xi'an Xinrong Engineering and Industry (Group) Co., Ltd [Member] | |||||
Amounts Due from Related Companies (Textual) | |||||
Outstanding loan | $ 4,296 | $ 4,285 | |||
Indirectly owned and controlled, percentage | 74.00% | 74.00% | |||
Related party, interest rate | 4.75% | ||||
Interest rate term, description | The same as the 3 to 5 years interest rate of the central bank. | ||||
Xi'an Xinrong Engineering and Industry (Group) Co., Ltd [Member] | Minimum [Member] | |||||
Amounts Due from Related Companies (Textual) | |||||
Outstanding loan | $ 1,800 | ||||
Largest amount of outstanding loan | 1,800 | ||||
Xi'an Xinrong Engineering and Industry (Group) Co., Ltd [Member] | Maximum [Member] | |||||
Amounts Due from Related Companies (Textual) | |||||
Outstanding loan | $ 2,700 | ||||
Largest amount of outstanding loan | 2,700 | ||||
Shaanxi Tech Team Jinong Humid Acid Product Co Ltd [Member] | |||||
Amounts Due from Related Companies (Textual) | |||||
Outstanding loan | $ 500 | ||||
[1] | All of the VIE's assets can be used to settle obligations of their primary beneficiary. Liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company's general assets (Note 3). |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Sep. 30, 2016 | |
Inventories [Abstract] | |||
Raw material | |||
Finished goods | 45 | 45 | |
Project-in-progress | 45 | ||
Total | [1] | $ 45 | $ 90 |
[1] | All of the VIE's assets can be used to settle obligations of their primary beneficiary. Liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company's general assets (Note 3). |
Inventories (Details Textual)
Inventories (Details Textual) - USD ($) $ in Thousands | Sep. 30, 2017 | Sep. 30, 2016 | |
Inventories (Textual) | |||
Inventory, Net | [1] | $ 45 | $ 90 |
Obsolete inventory [Member] | |||
Inventories (Textual) | |||
Inventory, Net | $ 300 | ||
[1] | All of the VIE's assets can be used to settle obligations of their primary beneficiary. Liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company's general assets (Note 3). |
Other Receivables and Prepaym63
Other Receivables and Prepayments (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Sep. 30, 2016 | |
Other Receivables and Prepayments [Abstract] | |||
Advances to employees | $ 130 | ||
Deposits on projects | 86 | 22 | |
Prepayment to suppliers | 29 | 24 | |
Others | 49 | ||
Total | [1] | $ 115 | $ 225 |
[1] | All of the VIE's assets can be used to settle obligations of their primary beneficiary. Liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company's general assets (Note 3). |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Sep. 30, 2016 | |
Property and Equipment, Net [Abstract] | |||
Buildings and improvements | $ 14,237 | $ 14,204 | |
Vehicles | 379 | 378 | |
Other equipment and devices | 327 | 296 | |
Total property and equipment | 14,943 | 14,878 | |
Less: accumulated depreciation | (4,573) | (4,016) | |
Property and equipment, net | [1] | $ 10,370 | $ 10,863 |
[1] | All of the VIE's assets can be used to settle obligations of their primary beneficiary. Liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company's general assets (Note 3). |
Property and Equipment, Net (65
Property and Equipment, Net (Details Textual) - USD ($) | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
Property and Equipment, Net (Textual) | |||
Depreciation expenses | $ 545,803 | $ 534,377 | $ 615,000 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Sep. 30, 2016 | |
Intangible Assets, Net [Abstract] | |||
Land-use rights | $ 637 | $ 636 | |
Less: accumulated amortization | (128) | (109) | |
Intangible assets, net | [1] | $ 509 | $ 527 |
[1] | All of the VIE's assets can be used to settle obligations of their primary beneficiary. Liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company's general assets (Note 3). |
Intangible Assets, Net (Detai67
Intangible Assets, Net (Details 1) - USD ($) $ in Thousands | Sep. 30, 2017 | Sep. 30, 2016 |
Intangible Assets, Net [Abstract] | ||
September 30, 2018 | $ 20 | |
September 30, 2019 | 20 | |
September 30, 2020 | 20 | |
September 30, 2021 | 20 | |
September 30, 2022 | 20 | |
Thereafter | 447 | |
Total | $ 527 | $ 509 |
Intangible Assets, Net (Detai68
Intangible Assets, Net (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
Intangible Assets, Net (Textual) | |||
Amortization expenses | $ 18,465 | $ 18,421 | $ 19,932 |
Accounts Payable (Details)
Accounts Payable (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Sep. 30, 2016 | |
Accounts Payable/Other Payables and Accruals [Abstract] | |||
Payable to third-party suppliers | $ 917 | $ 1,277 | |
Accounts payable | [1] | $ 917 | $ 1,277 |
[1] | All of the VIE's assets can be used to settle obligations of their primary beneficiary. Liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company's general assets (Note 3). |
Advance from Customers (Details
Advance from Customers (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Sep. 30, 2016 | |
Advance from Customers [Abstract] | |||
Advance from third-party customers | $ 368 | $ 381 | |
Advances from customers | [1] | $ 368 | $ 381 |
[1] | All of the VIE's assets can be used to settle obligations of their primary beneficiary. Liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company's general assets (Note 3). |
Other Payables and Accruals (De
Other Payables and Accruals (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Sep. 30, 2016 | |
Accounts Payable/Other Payables and Accruals [Abstract] | |||
Accrued employee benefits | $ 42 | $ 44 | |
Other payables | 100 | 152 | |
Total | [1] | $ 142 | $ 195 |
[1] | All of the VIE's assets can be used to settle obligations of their primary beneficiary. Liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company's general assets (Note 3). |
Taxes Payable (Details)
Taxes Payable (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Sep. 30, 2016 | |
Taxes Payable Disclosure [Line Items] | |||
Total | [1] | $ 1,278 | $ 1,406 |
Enterprise income tax payable [Member] | |||
Taxes Payable Disclosure [Line Items] | |||
Total | 319 | 319 | |
Individual income tax [Member] | |||
Taxes Payable Disclosure [Line Items] | |||
Total | 498 | 497 | |
Other taxes payable [Member] | |||
Taxes Payable Disclosure [Line Items] | |||
Total | $ 461 | $ 590 | |
[1] | All of the VIE's assets can be used to settle obligations of their primary beneficiary. Liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company's general assets (Note 3). |
Dividends Payable (Details)
Dividends Payable (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Sep. 30, 2016 | |
Dividends Payable [Abstract] | |||
Dividend due to shareholders | $ 777 | $ 775 | |
Dividends payable | [1] | $ 777 | $ 775 |
[1] | All of the VIE's assets can be used to settle obligations of their primary beneficiary. Liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company's general assets (Note 3). |
Dividends Payable (Details Text
Dividends Payable (Details Textual) | 12 Months Ended |
Sep. 30, 2009USD ($) | |
Dividends Payable (Textual) | |
Dividends resolution to shareholders | $ 4,096,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
Schedule of total rental income | |||
Total rental income | $ 44,145 | $ 44,972 | $ 44,852 |
Related Party Transactions (D76
Related Party Transactions (Details Textual) | 24 Months Ended | ||||
Jun. 29, 2016USD ($) | Jun. 29, 2016CNY (¥) | Jun. 30, 2014USD ($) | Jun. 30, 2014CNY (¥) | Sep. 30, 2017m² | |
Related Party Transactions (Textual) | |||||
Gross floor space | 184.8 | ||||
Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd. [Member] | |||||
Related Party Transactions (Textual) | |||||
Rent expense (monthly) | $ 3,970 | ¥ 24,480 | $ 3,867 | ¥ 24,480 | |
Jinong [Member] | |||||
Related Party Transactions (Textual) | |||||
Lease was renewed monthly rent | $ 3,679 | ¥ 24,480 |
Major Customers and Vendors (De
Major Customers and Vendors (Details) | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
One Vendor [Member] | |||
Major Customers and Vendors (Textual) | |||
Percentage of total purchases | 10.00% | ||
Two vendors [Member] | |||
Major Customers and Vendors (Textual) | |||
Percentage of total purchases | 10.00% | 10.00% | |
One customer [Member] | |||
Major Customers and Vendors (Textual) | |||
Percentage of total sales | 0.00% | 21.00% | 65.00% |
Percentage of outstanding accounts receivable balance | 66.00% | 49.00% | 36.00% |
Commitments and Contingencies78
Commitments and Contingencies (Details) | 12 Months Ended | |
Sep. 30, 2017USD ($) | Sep. 30, 2017CNY (¥) | |
Peng Zhang [Member] | ||
Commitments and Contingencies [Line Items] | ||
Annual Base Salary | $ 28,285 | ¥ 180,000 |
Term | Until 2,019 | Until 2,019 |
Li Wu [Member] | ||
Commitments and Contingencies [Line Items] | ||
Annual Base Salary | $ 20,742 | ¥ 132,000 |
Term | Until 2,019 | Until 2,019 |
Wei Zhang [Member] | ||
Commitments and Contingencies [Line Items] | ||
Annual Base Salary | $ 18,857 | ¥ 120,000 |
Term | Until 2,019 | Until 2,019 |
Xiang Bu [Member] | ||
Commitments and Contingencies [Line Items] | ||
Annual Base Salary | $ 18,857 | ¥ 120,000 |
Term | Until 2,019 | Until 2,019 |
Zhenyu Chen [Member] | ||
Commitments and Contingencies [Line Items] | ||
Annual Base Salary | $ 18,857 | ¥ 120,000 |
Term | Until 2,019 | Until 2,019 |
Commitments and Contingencies79
Commitments and Contingencies (Details Textual) - Executive officers [Member] | 12 Months Ended |
Sep. 30, 2009 | |
Commitments and Contingencies (Textual) | |
Employment term years | 5 years |
Employment notice period | 30 days |
Employment agreement renewed | In 2015, certain of our executive officers have renewed the employment agreement for 5 years ending in 2019. |
Share-Based Compensation (Detai
Share-Based Compensation (Details) | May 14, 2010$ / shares | |
Share-Based Compensation [Abstract] | ||
Risk-free interest rates | 1.63% | |
Expected term | 10 years | |
Expected volatility | 90.00% | |
Expected dividend yield | 0.00% | |
Fair value of underlying ordinary share (per share) | $ 3.94 | [1] |
[1] | Represents initial public offering close price |
Share-Based Compensation (Det81
Share-Based Compensation (Details 1) - Options [Member] | 12 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Fair Value, Option, Quantitative Disclosures [Line Items] | |
Exercise Price Per Share | $ 40 |
Number outstanding as of September 30, 2017 | shares | 12,334 |
Weighted Average Fair Value | $ 189 |
Weighted Average Remaining Life (Years) | 2 years 7 months 13 days |
Number Exercisable as of September 30, 2016 | shares | 12,334 |
Weighted Average Exercise Price | $ 18.9 |
Share-Based Compensation (Det82
Share-Based Compensation (Details 2) - Employee share option plan [Member] | 12 Months Ended |
Sep. 30, 2017USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding as of October 1, 2016, Number of shares | shares | 12,334 |
Granted during the year, Number of shares | shares | |
Outstanding as of September 30, 2017, Number of shares | shares | 12,334 |
Outstanding as of October 1, 2016, Exercise Price | $ / shares | $ 40 |
Granted during the year, Exercise Price | $ / shares | |
Forfeited during the year, Exercise Price | $ / shares | |
Outstanding as of September 30, 2017, Exercise Price | $ / shares | $ 40 |
Outstanding as of October 1, 2016, Remaining Life (Years) | 3 years 7 months 13 days |
Granted during the year, Remaining Life (Years) | 0 years |
Forfeited during the year, Remaining Life (Years) | 0 years |
Outstanding as of September 30, 2017, Remaining Life (Years) | 2 years 7 months 13 days |
Outstanding as of October 1, 2016, Aggregated Intrinsic Value | $ | |
Granted during the year, Aggregated Intrinsic Value | $ | |
Forfeited during the year, Aggregated Intrinsic Value | $ | |
Outstanding as of September 30, 2017, Aggregated Intrinsic Value | $ |
Share-Based Compensation (Det83
Share-Based Compensation (Details Textual) - USD ($) | Nov. 06, 2012 | May 14, 2010 | Apr. 23, 2012 | Apr. 23, 2011 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 |
Share-Based Compensation (Textual) | |||||||
Fair value of options grant date | $ 1.89 | ||||||
Reverse stock split | 1-for-10 | ||||||
Restricted stock [Member] | |||||||
Share-Based Compensation (Textual) | |||||||
Granted | 100,000 | ||||||
Vested | 50,000 | 50,000 | |||||
Forfeited | 50,000 | ||||||
Restricted shares | 100,000 | ||||||
Granted during the year fair value | $ 3.94 | ||||||
Restricted stock or unit expense | $ 0 | $ 0 | $ 0 | ||||
Options [Member] | |||||||
Share-Based Compensation (Textual) | |||||||
Share-based compensation expenses | $ 0 | $ 0 | $ 0 | ||||
2010 Plan [Member] | |||||||
Share-Based Compensation (Textual) | |||||||
Share-based compensation, Description | The Company may grant options or restricted awards to its employees, directors and consultants to purchase an aggregate of no more than 1,500,000 ordinary shares (on a pre-Reverse Split basis) of the Company, subject to different vesting requirements. | ||||||
Granted options | 180,000 | ||||||
Option grant date and vesting, term | 10 years | ||||||
Exercise price per share | $ 4 |
Statutory Reserves (Details)
Statutory Reserves (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
Statutory Reserves (Textual) | |||
Percentage of after tax profits | 10.00% | ||
Percentage of discontinue allocations of general reserve on registered capital | 50.00% | ||
Statutory reserves | $ 426,051 | $ 444,318 | $ 0 |
Ordinary Shares (Details)
Ordinary Shares (Details) - USD ($) | Nov. 06, 2012 | May 31, 2010 | Sep. 30, 2011 | Sep. 30, 2017 | Sep. 30, 2016 |
Ordinary Shares (Textual) | |||||
Ordinary share, shares authorized | 100,000,000 | 100,000,000 | |||
Ordinary share, par value | $ 0.01 | $ 0.01 | |||
Ordinary shares issued | 1,405,000 | 1,405,000 | |||
Ordinary shares outstanding | 1,405,000 | 1,405,000 | |||
Issued shares of ADSs | 4,000,000 | ||||
Direct cost related to this transaction, including underwriter fees, attorney fees, audit fees, etc. | $ 1,496,000 | ||||
Reverse stock split, Description | 1-for-10 | ||||
Restricted stock [Member] | |||||
Ordinary Shares (Textual) | |||||
Shares issued | 50,000 | ||||
Reserve Stock Split [Member] | |||||
Ordinary Shares (Textual) | |||||
Ordinary share, par value | $ 0.001 | ||||
Reverse stock split, Description | The Company shall issue one (1) ordinary share (each, a "New Share" and collectively, the"New Shares") for every ten (10) ordinary shares held by its members ("Old Shares") (the "Reverse Stock Split"). The par value of each New Share was $0.01, equal to the aggregate of the par value of ten Old Shares combined. | ||||
Public offering [Member] | |||||
Ordinary Shares (Textual) | |||||
Ordinary shares issued | 10,000,000 | ||||
Ordinary shares outstanding | 10,000,000 | ||||
Issued shares of ADSs | 4,000,000 | ||||
Stocks issued, values | $ 16,000,000 | ||||
Per share amounts | $ 4 | ||||
Stock [Member] | |||||
Ordinary Shares (Textual) | |||||
Shares issued | 50,000 |
Earnings Per Ordinary Share (De
Earnings Per Ordinary Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
Numerator used in basic net income per share: | |||
Net income (loss) for the year | $ (219) | $ (160) | $ 1,027 |
Shares | |||
Weighted average number of ordinary shares outstanding | 1,405,000 | 1,405,000 | 1,405,000 |
Weighted average number of ordinary shares outstanding used in computing diluted earnings per ordinary share | 1,405,000 | 1,405,000 | 1,405,000 |
Loss per ordinary share- basic and diluted | $ (0.16) | $ (0.11) | $ 0.73 |
Earnings Per Ordinary Share (87
Earnings Per Ordinary Share (Details Textual) | 12 Months Ended |
Sep. 30, 2017shares | |
Earnings Per Ordinary Share (Textual) | |
Restricted shares | 0 |
Options [Member] | |
Earnings Per Ordinary Share (Textual) | |
Antidilutive securities excluded from computation of earnings per share, amount | 12,334 |
Subsequent Event (Details)
Subsequent Event (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | |||
Jan. 26, 2018 | Jan. 25, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Subsequent Event (Textual) | ||||
Ordinary shares issued | 1,405,000 | 1,405,000 | ||
Ordinary shares par value | $ 0.01 | $ 0.01 | ||
Ordinary shares authorized | 100,000,000 | 100,000,000 | ||
Subsequent Event [Member] | ||||
Subsequent Event (Textual) | ||||
Repayment of related parties | $ 6,986 | |||
Repayment of related party, current | ||||
Repayment of related party, noncurrent | ||||
Subsequent Event [Member] | AEA [Member] | C Media [Member] | ||||
Subsequent Event (Textual) | ||||
Ordinary shares issued | 185,412,599 | |||
Ordinary shares par value | $ 0.01 | |||
Preferred shares issued | 1,000,000 | |||
Subsequent Event [Member] | AEA [Member] | Shareholders [Member] | ||||
Subsequent Event (Textual) | ||||
Preferred shares authorized | 1,000,000 | |||
Ordinary shares authorized | 250,000,000 |