WEB NEWS Auditor trail
Item 4.01 Changes in Registrant's Certifying Accountant
Comments & Business Outlook
Nine months and Three months ended February 29, 2016 and February 28, 2015
Nine months ended February 29, 2016 (Unaudited)
Nine months ended February 28, 2015 (Unaudited)
Three months ended February 29, 2016 (Unaudited)
Three months ended February 28, 2015 (Unaudited)
Continuing operations
Revenue
4,514,988
6,097,699
1,364,041
1,536,250
Other income and gains
83,053
151,229
10,296
20,125
Service costs
(3,260,970
)
(4,858,845
)
(894,332
)
(1,267,397
)
Personnel cost
(548,191
)
(626,758
)
(234,699
)
(250,330
)
Depreciation expense
(381,320
)
(391,596
)
(101,380
)
(133,622
)
Amortization expense
(118,825
)
(106,455
)
(45,901
)
(33,240
)
Administrative and other expenses
(1,137,652
)
(722,580
)
(672,878
)
(228,194
)
Loss before provision for income taxes
(848,917
)
(457,306
)
(574,853
)
(356,408
)
Income tax (expense)/ income
(85,905
)
(12,072
)
2,925
(19,460
)
Net loss before non-controlling interest
(934,822
)
(469,378
)
(571,928
)
(375,868
)
Share of results by non-controlling interest
140,335
46,904
158,671
20,575
Net loss from continuing operations
(794,487
)
(422,474
)
(413,257
)
(355,293
)
Discontinued operations
Net loss
-
(104,018
)
-
-
Gain on disposal of subsidiaries
-
1,010,987
-
-
Net income from discontinued operations
-
906,969
-
-
Net (loss)/ income for the period
Net (loss)/ income before non-controlling interest
(934,822
)
437,591
(571,928
)
(375,868
)
Share of results by non-controlling interest
140,335
46,904
158,671
20,575
Net (loss)/ income for the period
(794,487
)
484,495
(413,257
)
(355,293
)
Other comprehensive loss
Loss on foreign currency translation of continuing operations
(392,104
)
(49,512
)
(130,061
)
(32,761
)
Share of other comprehensive income/ (loss) by non-controlling interest
23,466
470
13,362
(444
)
Other comprehensive loss attributable to shareholders of the Company
(368,638
)
(49,042
)
(116,699
)
(33,205
)
Gain on foreign currency translation of discontinued operations
-
17,162
-
-
Total other comprehensive (loss)/ income
(368,638
)
(31,880
)
(116,699
)
(33,205
)
Total comprehensive (loss)/ income
- Attributable to continuing operations
(1,163,125
)
(471,516
)
(529,956
)
(388,498
)
- Attributable to discontinued operations
-
924,131
-
-
Total comprehensive (loss)/ income
(1,163,125
)
452,615
(529,956
)
(388,498
)
(Loss)/earnings per share, basic and diluted
– continuing operations
-
-
-
-
– discontinued operations
-
-
-
-
Weighted average number of shares
282,315,356
282,315,356
282,315,356
282,315,356
Comments & Business Outlook
Six months and Three months ended November 31, 2015 and 2014
Six months ended November 30, 2015 (Unaudited)
Six months ended November 30, 2014 (Unaudited)
Three months ended November 30, 2015 (Unaudited)
Three months ended November 30, 2014 (Unaudited)
Continuing operations
Revenue
3,150,947
4,561,449
1,292,505
2,384,134
Other income and gains
72,757
131,104
1,527
49,655
Service costs
(2,366,638
)
(3,591,448
)
(934,492
)
(1,893,913
)
Personnel cost
(313,492
)
(376,428
)
(151,391
)
(162,973
)
Depreciation expense
(279,940
)
(257,974
)
(132,065
)
(131,391
)
Amortization expense
(72,924
)
(73,215
)
(32,950
)
(33,235
)
Administrative and other expenses
(464,774
)
(494,386
)
(233,838
)
(301,599
)
(Loss)/income before provision for income taxes
(274,064
)
(100,898
)
(190,704
)
(89,322
)
Income tax (expense)/ income
(88,830
)
7,388
10,981
3,700
Net (loss)/income before non-controlling interest
(362,894
)
(93,510
)
(179,723
)
(85,622
)
Share of results by non-controlling interest
(18,336
)
26,329
(10,319
)
32,565
Net (loss)/income from continuing operations
(381,230
)
(67,181
)
(190,042
)
(53,057
)
Discontinued operations
Net loss
-
(104,018
)
-
-
Gain on disposal of subsidiaries
-
1,010,987
-
-
Net income from discontinued operations
-
906,969
-
-
Net (loss)/ income for the period
Net (loss)/ income before non-controlling interest
(362,894
)
813,459
(179,723
)
(85,622
)
Share of results by non-controlling interest
(18,336
)
26,329
(10,319
)
32,565
Net (loss)/ income for the period
(381,230
)
839,788
(190,042
)
(53,057
)
Other comprehensive (loss)/ income
Loss on foreign currency translation of continuing operations
(262,043
)
(16,751
)
(71,711
)
(20,546
)
Share of other comprehensive income/ (loss) by non-controlling interest
10,104
914
-
(68
)
Other comprehensive loss attributable to shareholders of the Company
(251,939
)
(15,837
)
(71,711
)
(20,614
)
Gain on foreign currency translation of discontinued operations
-
17,162
-
-
Total other comprehensive (loss)/ income
(251,939
)
1,325
(71,711
)
(20,614
)
Total comprehensive loss
Attributable to continuing operations
(633,169
)
(83,018
)
(261,753
)
(73,671
)
Attributable to discontinued operations
-
924,131
-
-
Total comprehensive (loss)/ income
(633,169
)
841,113
(261,753
)
(73,671
)
(Loss)/earnings per share, basic and diluted
continuing operations
-
-
-
-
discontinued operations
-
-
-
-
Weighted average number of shares
282,315,356
282,315,356
282,315,356
282,315,356
Management Discussion and Analysis
The Company generated revenue of $3,150,947 in the first six months of the fiscal year ending May 31, 2016, representing a 31% decrease as compared with the preceding year's corresponding quarters. The decrease in revenues was mainly due to lower consumption from the competitive market of $1,410,502.
For the quarter under review, the decreased in revenue has caused the net loss before non-controlling interest stood at $362,894 as compared to a loss of $93,510 over the preceding year's corresponding quarter.
Comments & Business Outlook
Three months ended August 31, 2015 and 2014
Three months ended August 31, 2015 (Unaudited)
Three months ended August 31, 2014 (Unaudited)
Continuing operations
Revenue
1,858,442 2,177,315
Other income and gains
71,230 81,449
Service costs
(1,432,146 ) (1,697,535 )
Personnel cost
(162,101 ) (213,455 )
Depreciation expense
(147,875 ) (126,583 )
Amortization expense
(39,974 ) (39,980 )
Administrative and other expenses
(230,936 ) (192,787 )
Loss before provision for income taxes
(83,360 ) (11,576 )
Income tax income
(99,811 ) 3,688
Net loss before non-controlling interest
(183,171 ) (7,888 )
Share of results by non-controlling interest
(8,017 ) (6,236 )
Net loss from continuing operations
(191,188 ) (14,124 )
Discontinued operations
Net loss
- (104,018 )
Gain on disposal of subsidiaries
- 1,010,987
Net income from discontinued operations
- 906,969
Net (loss)/ income for the year
Net (loss)/ income before non-controlling interest
(183,171 ) 899,081
Share of results by non-controlling interest
(8,017 ) (6,236 )
Net (loss)/ income for the year
(191,188 ) 892,845
Other comprehensive (loss)/income
(Loss)/ Gain on foreign currency translation of continuing operations
(190,332 ) 3,795
Share of other comprehensive income by non-controlling interest
10,104 982
Other comprehensive (loss)/ income attributable to shareholders of the Company
(180,228 ) 4,777
Gain on foreign currency translation of discontinued operations
- 17,162
Total other comprehensive (loss)/ income
(180,228 ) 21,939
Total comprehensive (loss)/income
- Attributable to continuing operations
(371,416 ) (9,347 )
- Attributable to discontinued operations
- 924,131
Total comprehensive (loss)/ income
(371,416 ) 914,784
(Loss)/earnings per share, basic and diluted
– continuing operations
- -
– discontinued operations
- -
Weighted average number of shares
282,315,356 282,315,356
Management Discussion and Analysis
Revenues. The Company generated revenue of $1,858,442 in the first three months of the fiscal year ending May 31, 2016, representing a 15% decrease as compared with the preceding year’s corresponding quarters. The decrease in revenues was mainly due to lower consumption from the competitive market of $318,873.
Net loss before non-controlling interest. For the quarter under review, the increased in expenses by the newly acquired Taizhou Group has caused the net loss before non-controlling interest stood at $183,171 as compared to a marginal loss of $7,888 over the preceding year’s corresponding quarter.
Comments & Business Outlook
Years ended May 31, 2015 and 201
2015
2014
Continuing operations
Revenue
8,423,788 6,176,820
Other income and gains
117,179 149,588
Service costs
(6,908,020 ) (2,955,367 )
Personnel cost
(827,606 ) (752,868 )
Depreciation expense
(541,142 ) (484,432 )
Amortization expense
(321,033 ) (137,452 )
Administrative and other expenses
(1,165,708 ) (806,221 )
(Loss)/income before provision for income taxes
(1,222,542 ) 1,190,068
(Provision for income taxes)/income tax income
(68,002 ) 104,362
Net (loss)/income before non-controlling interest
(1,290,544 ) 1,294,430
Share of loss by non-controlling interest
351,862 27,435
Net (loss)/income
(938,682 ) 1,321,865
Discontinued operations
Net loss
(104,018 ) (244,237 )
Gain on disposal of discontinued operations
1,010,987 -
Net income/(loss) for the year
906,969 (244,237 )
Net (loss)/income for the year
Net (loss)/income before non-controlling interest
(383,575 ) 1,050,193
Non-controlling interest
351,862 27,435
Net (loss)/income for the year
(31,713 ) 1,077,628
Other comprehensive (loss)/income
Loss on foreign currency translation of continuing operations
(71,601 ) (4,876 )
Share of other comprehensive income by non-controlling interest
4,089 (1,810 )
Other comprehensive loss attributable to shareholders of the Company
(67,512 ) (6,686 )
Gain on foreign currency translation of discontinued operations
17,162 7,962
Total other comprehensive (loss)/income
(50,350 ) 1,276
Total comprehensive (loss)/income
- Attributable to continuing operations
(1,006,194 ) 1,315,179
- Attributable to discontinued operations
924,131 (236,275 )
Total comprehensive (loss)/income
(82,063 ) 1,078,904
Earnings per share, basic and diluted
– continuing operations
(0.00 ) 0.00
– discontinued operations
0.00 (0.00 )
Weighted average number of shares
282,315,325 282,315,325
Management Discussion and Analysis
Revenues. The Company generated revenue of $8,423,788 in the fiscal year ended May 31, 2015, representing a 36% increase as compared with the fiscal year ended May 31, 2014. The increase was mainly due to a full year’s operation of Xin Chang in fiscal year 2015 as compared to a 5 months post acquisition results in fiscal year 2014 that contributed an increase revenue from by $1.26 million in current year.
Net (loss)/income before non-controlling interest. For the fiscal year under review, the increased in service costs has caused the net loss before non-controlling interest stood at $1,290,544 as compared to a net income of $1,294,430 over fiscal year 2014.
Comments & Business Outlook
Nine months and three months ended February 28, 2015 and 2014
Nine months ended February 28, 2015 (Unaudited)
Nine months ended February 28, 2014 (Unaudited)
Three months ended February 28, 2015 (Unaudited)
Three months ended February 28, 2014 (Unaudited)
Continuing operations
Revenue
6,097,699 4,365,689 1,536,250 1,460,619
Other income and gains
151,229 110,350 20,125 12,900
Service costs
(4,858,845 ) (1,862,764 ) (1,267,397 ) (630,544 )
Personnel cost
(626,758 ) (560,718 ) (250,330 ) (230,729 )
Depreciation expense
(391,596 ) (361,071 ) (133,622 ) (121,473 )
Amortization expense
(106,455 ) (89,240 ) (33,240 ) (31,030 )
Administrative and other expenses
(722,580 ) (492,927 ) (228,194 ) (199,469 )
(Loss)/income before provision for income taxes
(457,306 ) 1,109,319 (356,408 ) 260,274
Income tax income
(12,072 ) (225,875 ) (19,460 ) (154,282 )
Net (loss)/income before non-controlling interest
(469,378 ) 883,444 (375,868 ) 105,992
Share of results by non-controlling interest
46,904 27,035 20,575 27,035
Net (loss)/income from continuing operations
(422,474 ) 910,479 (355,293 ) 133,027
Discontinued operations
Net loss
(104,018 ) (229,892 ) - (76,666 )
Gain on disposal of subsidiaries
1,010,987 - - -
Net income/(loss) from discontinued operations
906,969 (229,892 ) - (76,666 )
Net income/(loss) for the year
Net income/(loss) before non-controlling interest
437,591 653,552 (375,868 ) 29,326
Share of results by non-controlling interest
46,904 27,035 20,575 27,035
Net income/(loss) for the year
484,495 680,587 (355,293 ) 56,361
Other comprehensive income/(loss)
(Loss)/gain on foreign currency translation of continuing operations
(49,512 ) 51,000 (32,761 ) 72,517
Share of other comprehensive income/(loss) by non-controlling interest
470 497 (444 ) 497
Other comprehensive income/(loss) attributable to shareholders of the Company
(49,042 ) 51,497 (33,205 ) 73,014
Gain on foreign currency translation of discontinued operations
17,162 11,740 - 694
Total other comprehensive income/(loss)
(31,880 ) 63,237 (33,205 ) 73,708
Total comprehensive income/(loss)
- Attributable to continuing operations
(471,516 ) 961,976 (388,498 ) 206,041
- Attributable to discontinued operations
924,131 (218,152 ) - (75,972 )
Total comprehensive income/(loss)
452,615 743,824 (388,498 ) 130,069
(Loss)/earnings per share, basic and diluted
– continuing operations
- - - -
– discontinued operations
- - - -
Weighted average number of shares
282,315,325 282,315,325 282,315,325 282,315,325
Management Discussion and Analysis
Revenues. The Company generated revenue of $6,097,699 in the first nine months of the fiscal year ending May 31, 2015, representing a 40% increase as compared with the preceding year’s corresponding period. The increase in revenues was mainly due to higher consumption from the competitive market of $658,005 as well as the increase in revenue from the newly acquired subsidiary, Xinchang, amounted to $1,073,838.
Loss)/income before provision for income taxes. For the period under review, the increased in service costs has caused the net loss before provision for income taxes stood at $457,306 as compared to a gain of $1,109,319 over the preceding year’s corresponding quarter.
Net loss before non-controlling interest. For the period under review, the increased in service costs has caused the net loss before non-controlling interest stood at $469,378 as compared to a gain of $883,444 over the preceding year’s corresponding quarter.
Comments & Business Outlook
Six months and three months ended November 30, 2014 and 2013
Six months ended November 30, 2014 (Unaudited)
Six months ended November 30, 2013 (Unaudited)
Three months ended November 30, 2014 (Unaudited)
Three months ended November 30, 2013 (Unaudited)
Continuing operations
Revenue
4,561,449 2,905,070 2,384,134 1,410,803
Other income and gains
131,104 97,450 49,655 55,160
Service costs
(3,591,448 ) (1,232,220 ) (1,893,913 ) (415,970 )
Personnel cost
(376,428 ) (329,989 ) (162,973 ) (159,578 )
Depreciation expense
(257,974 ) (239,598 ) (131,391 ) (120,709 )
Amortization expense
(73,215 ) (58,210 ) (33,235 ) (27,782 )
Administrative and other expenses
(494,386 ) (293,458 ) (301,599 ) (138,755 )
(Loss)/income before provision for income taxes
(100,898 ) 849,045 (89,322 ) 603,169
Income tax income
7,388 (71,593 ) 3,700 (75,982 )
Net (loss)/income before non-controlling interest
(93,510 ) 777,452 (85,622 ) 527,187
Share of results by non-controlling interest
26,329 - 32,565 -
Net (loss)/income from continuing operations
(67,181 ) 777,452 (53,057 ) 527,187
Discontinued operations
Net loss
(104,018 ) (153,226 ) - (126,736 )
Gain on disposal of subsidiaries
1,010,987 - - -
Net income/(loss) from discontinued operations
906,969 (153,226 ) - (126,736 )
Net income for the year
Net income before non-controlling interest
813,459 624,226 (85,622 ) 400,451
Share of results by non-controlling interest
26,329 - 32,565 -
Net income for the year
839,788 624,226 (53,057 ) 400,451
Other comprehensive income
Gain on foreign currency translation of continuing operations
(16,751 ) (21,517 ) (20,546 ) (27,799 )
Share of other comprehensive income by non-controlling interest
914 - (68 ) -
Other comprehensive income attributable to shareholders of the Company
(15,837 ) (21,517 ) (20,614 ) (27,799 )
Gain on foreign currency translation of discontinued operations
17,162 11,046 - 434
Total other comprehensive income
1,325 (10,471 ) (20,614 ) (27,365 )
Total comprehensive income/(loss)
- Attributable to continuing operations
(83,018 ) 755,935 (73,671 ) 499,388
- Attributable to discontinued operations
924,131 (142,180 ) - (126,302 )
Total comprehensive income
841,113 613,755 (73,671 ) 373,086
(Loss)/earnings per share, basic and diluted
– continuing operations
- - - -
– discontinued operations
- - - -
Weighted average number of shares
282,315,325 282,315,325 282,315,325 282,315,325
Management Discussion and Analysis
Revenues. The Company generated revenue of $4,561,449 in the first six months of the fiscal year ending May 31, 2015, representing a 57% increase as compared with the preceding year’s corresponding period. The increase in revenues was mainly due to higher consumption from the competitive market of $751,570 as well as inclusion of revenue from the newly acquired subsidiary, Xinchang, amounted to $904,809.
Net loss before non-controlling interest. For the period under review, the increased in service costs has caused the net loss before non-controlling interest stood at $93,510 as compared to a gain of $777,452 over the preceding year’s corresponding quarter.
Comments & Business Outlook
Three months ended August 31, 2014 and 2013
Three months ended August 31, 2014 (Unaudited)
Three months ended August 31, 2013 (Unaudited)
Continuing operations
Revenue
2,177,315 1,494,267
Other income and gains
81,449 42,290
Service costs
(1,697,535 ) (816,250 )
Personnel cost
(213,455 ) (170,411 )
Depreciation expense
(126,583 ) (118,889 )
Amortization expense
(39,980 ) (30,428 )
Administrative and other expenses
(192,787 ) (154,703 )
(Loss)/income before provision for income taxes
(11,576 ) 245,876
Income tax income
3,688 4,389
Net (loss)/income before non-controlling interest
(7,888 ) 250,265
Share of results by non-controlling interest
(6,236 ) -
Net (loss)/income from continuing operations
(14,124 ) 250,265
Discontinued operations
Net loss
(104,018 ) (126,736 )
Gain on disposal of subsidiaries
1,010,987 -
Net income/(loss) from discontinued operations
906,969 (126,736 )
Net income for the year
Net income before non-controlling interest
899,081 123,529
Share of results by non-controlling interest
(6,236 ) -
Net income for the year
892,845 123,529
Other comprehensive income
Gain on foreign currency translation of continuing operations
3,795 6,282
Share of other comprehensive income by non-controlling interest
982 -
Other comprehensive income attributable to shareholders of the Company
4,777 6,282
Gain on foreign currency translation of discontinued operations
17,162 10,612
Total other comprehensive income
21,939 16,894
Total comprehensive income/(loss)
- Attributable to continuing operations
(9,347 ) 256,547
- Attributable to discontinued operations
924,131 (116,124 )
Total comprehensive income
914,784 140,423
(Loss)/earnings per share, basic and diluted
– continuing operations
- -
– discontinued operations
- -
Weighted average number of shares
282,315,325 282,315,325
Management Discussion and Analysis
Revenues. The Company generated revenue of $2,177,315 in the first three months of the fiscal year ending May 31, 2015, representing a 46% increase as compared with the preceding year’s corresponding quarters. The increase in revenues was mainly due to higher consumption from the competitive market of $214,019 as well as inclusion of revenue from the newly acquired subsidiary, Xinchang, amounted to $469,029.
Net loss before non-controlling interest. For the quarter under review, the increased in service costs has caused the net loss before non-controlling interest stood at $7,888 as compared to a gain of $250,265 over the preceding year’s corresponding quarter.
Deal Flow
Item 2.01 Completion of Acquisition or Disposition of Assets
On August 18, 2014, the Company has completed its full obligation on the agreement entered into on July 25, 2014 to dispose of its entire equity interest in Shanghai Hongsheng Net Telecommunications Company Limited (“Hongsheng”), a VIE subsidiary, to Guotai Investment Holdings Limited at RMB18 million for the entities and RMB10 million for the subsidiary’s electronic point-of-sale equipment and system, for a total cash consideration of RMB28 million. Pursuant to the terms of the Agreement, Hongsheng transferred all its operations, assets and liabilities other than investment in Shanghai Qianyue Business Administration Company, Limited to Shanghai Huitong Telecommunications Company, Limited.
(ii) subscription of 20% equity interest in Shanghai YuGuang Automobile Inspection Technology Co., Ltd (“Shanghai YuGuang”) for shares subscription of RMB200,000 on 11 September 2014.
Comments & Business Outlook
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Years ended May 31, 2014 and 2013
2014
2013
Continuing operations
Revenue
6,176,820 6,487,707
Other income and gains
149,588 97,588
Service costs
(2,955,367 ) (4,030,075 )
Personnel cost
(752,868 ) (619,800 )
Depreciation expense
(484,432 ) (459,122 )
Amortization expense
(137,452 ) (121,632 )
Administrative and other expenses
(806,221 ) (669,568 )
Income before provision for income taxes
1,190,068 685,098
Income tax income/(Provision for income taxes)
104,362 (284,680 )
Net income before non-controlling interest
1,294,430 400,418
Share of loss by non-controlling interest
27,435 -
Net income from continuing operations
1,321,865 400,418
Discontinued operations
Net loss
(244,237 ) (351,013 )
Net loss from discontinued operations
(244,237 ) (351,013 )
Net income for the year
Net income before non-controlling interest
1,050,193 49,405
Share of loss by non-controlling interest
27,435 -
Net income for the year
1,077,628 49,405
Other comprehensive income
Gain/(loss) on foreign currency translation of continuing operations
(4,876 ) 72,312
Share of other comprehensive income by non-controlling interest
(1,810 ) -
Other comprehensive income attributable to shareholders of the Company
(6,686 ) 72,312
Gain/(loss) on foreign currency translation of discontinued operations
7,962 79,602
Total other comprehensive income
1,276 151,914
Total comprehensive income
- Attributable to continuing operations
1,315,179 472,730
- Attributable to discontinued operations
(236,275 ) (271,411 )
Total comprehensive income
1,078,904 201,319
Earnings per share, basic and diluted
– continuing operations
0.00 0.00
– discontinued operations
(0.00 ) (0.00 )
Weighted average number of shares
282,315,356 282,315,356
Management Discussion and Analysis
Revenues. The Company generated revenue of $6,176,820 in the fiscal year ended May 31, 2014, representing a 5% decrease as compared with the fiscal year ended May 31, 2013. The decrease in revenues was mainly due to the decrease in call traffics in consumer voice business by $0.31 million, an intense price competition in telecommunication market.
Net income before non-controlling interest. For the financial year under review, the dropped in service costs and income tax income has caused the net income before non-controlling interest stood at $1,294,430 as compared to $400,418 over the financial year 2013.
Deal Flow
Item 1.01 Entry Into Material Definitive Agreement On July 25, 2014, the Company REDtone Asia, Inc. entered into an agreement to dispose of its entire equity interest in Shanghai Hongsheng Net Telecommunications Company Limited (“Hongsheng”), a VIE subsidiary, to Guotai Investment Holdings Limited at RMB18 million for the entities and RMB10 million for the subsidiary’s electronic point-of-sale equipment and system, for a total cash consideration of RMB28 million.
Prior to the completion of the above transaction, Hongsheng shall transfer all its operations, assets and liabilities other than investment in Shanghai Qianyue Business Administration Company, Limited to Shanghai Huitong Telecommunications Company, Limited.
Comments & Business Outlook
AND COMPREHENSIVE INCOME (UNAUDITED)
Three months and nine months ended February 28, 2014 and 2013
Three months ended
Nine months ended
Feb 28, 2014
Feb 28, 2013
Feb 28, 2014
Feb 28, 2013
Revenue
$ 1,460,418 $ 2,123,478 4,365,897 $ 5,736,338
Other income and gains
38,943 $ 55,946 185,245 134,242
Service costs
(630,545 ) $ (1,484,462 ) (1,862,821 ) (3,892,206 )
Personnel cost
(276,115 ) $ (226,957 ) (681,413 ) (656,168 )
Depreciation expense
(170,487 ) $ (162,345 ) (507,402 ) (484,742 )
Amortization expense
(31,030 ) $ (30,447 ) (89,240 ) (91,331 )
Administrative and other expenses
(207,576 ) $ (131,844 ) (530,839 ) (591,050 )
Income before provision for income taxes
183,608 143,369 879,427 155,083
Provision for income taxes
(154,282 ) $ (77,465 ) (225,875 ) (166,390 )
Net income
$ 29,326 $ 65,904 653,552 $ (11,307 )
Share of loss by non-controlling interest
27,035 - 27,035 -
Net income attributable to shareholders of the Company
56,361 65,904 680,587 (11,307 )
Other comprehensive income
Total Gain/(loss) on foreign currency translation
73,211 (7,775 ) 62,740 51,870
Share of other comprehensive income by non-controlling interest
497 - 497 -
Other comprehensive income attributable to shareholders of the Company
73,708 (7,775 ) 63,237 51,870
Total comprehensive income attributable to shareholders of the Company
$ 130,069 $ 58,129 743,824 $ 40,563
Earnings per share – basic
- - - -
Weighted average number of shares
282,315,325 282,315,325 282,315,325 282,315,325
Management Discussion and Analysis
Revenue
The Company generated revenue of $1,460,418 in the third quarter of the fiscal year ending May 31, 2014, representing a 31% decrease as compared with the preceding year’s corresponding quarters. The decrease in revenues was mainly due to the decrease in revenue from prepaid business solution segment by $0.7 million, a one-off revenue from prepaid business solution in the third quarter of last fiscal year.
Income before provision for income tax
Profit before provision for income tax totaled $183,608, as compared to $143,369 for the preceding year’s corresponding quarters. This is due to the improvement in operating performance.
Joint Venture
On January 22, 2014, Redtone Asia, Inc.’s wholly-owned subsidiary, Shanghai Hongsheng Net Telecommunication Company Limited, (the “Company”) completed the acquisition of a 56% equity interest in Shanghai Xin Chang Information Technology Company Limited (“Shanghai Xin Chang”) for a total consideration of RMB4.5 million (the “Acquisition”). The consideration will be paid into two tranches: 1) RMB1.5 million payable to Shanghai Xin Chang’s major shareholder, Mr. Diao, upon signing of the Acquisition Agreement and after completion of the Assets and Financial due diligence exercise; and 2) RMB3 million payable to Shanghai Xin Chang as an operating fund in batches based on Shanghai Xin Chang’s financial needs (the “Operating Fund”).
Comments & Business Outlook
AND COMPREHENSIVE INCOME (UNAUDITED)
Three months ended February 28,
Three months ended February 29,
Nine months ended February 28,
Nine months ended February 29,
2013
2012
2013
2012
Revenue
$ 2,123,478 $ 2,408,092 $ 5,736,338 $ 6,594,681
Other income and gains
55,946 104,412 134,242 173,029
Service costs
(1,484,462 ) (1,408,761 ) (3,892,206 ) (3,979,566 )
Personnel cost
(226,957 ) (284,550 ) (656,168 ) (808,726 )
Depreciation expense
(162,345 ) (159,891 ) (484,742 ) (484,577 )
Amortization expense
(30,447 ) (30,675 ) (91,331 ) (91,345 )
Administrative and other expenses
(131,844 ) (283,098 ) (591,050 ) (897,190 )
Income before provision for income taxes
143,369 345,529 155,083 506,306
Provision for income taxes
(77,465 ) (126,764 ) (166,390 ) (247,846 )
Net income/(loss)
$ 65,904 $ 218,765 $ (11,307 ) $ 258,460
Other comprehensive income
Gain on foreign currency translation
(7,775 ) 79,667 51,870 169,739
Total comprehensive income/(loss)
$ 58,129 $ 298,432 $ 40,563 $ 428,199
Net income/(loss) per share, basic and diluted
$ 0.00 $ 0.00 $ 0.00 $ 0.00
Weighted average number of shares
282,315,325 282,315,325 282,315,325 282,315,325
