Recon Reports Q1 Fiscal Year 2013 Financial Results

From the Wires

Q1 FY '2013 Revenue Up 83%, Net Loss Decreases by 31%

Nov. 15, 2012 07:03 AM

BEIJING, Nov. 15, 2012 /PRNewswire-FirstCall/ -- Recon Technology, Ltd (Nasdaq: RCON), an oilfield services provider that operates primarily in the People's Republic of China (the "Company"), today announced its financial results for first quarter fiscal year 2013 ended September 30, 2012.

Q1 FY '13 Highlights

Total revenues for Q1 FY '13 increased by 83.19% to RMB 9.05 million ($1.49 million), due mainly to increased demands of furnaces.
Gross profits for Q1 FY '13 were RMB2.45 million ($386 thousand),compared to RMB 2.48 million of Q1 FY '12.
Comprehensive loss attributable to ordinary shareholders for Q1 FY '13 was RMB2.34 million ($370 thousand), a 31.16% decrease from Q1 FY '12. Diluted losses per share attributable to ordinary shareholders for Q1 FY '13 was RMB0.59 ($0.09), an improvement of 31.39% from diluted losses per share of RMB0.86 in Q1 FY '12.
Adjust EBITDA in Q1 FY '13 was a loss of RMB1.45 million ($229 thousand), an improvement of 48.26% from Q1 FY '12.

The company's quarterly report on Form 10-Q is available for public viewing at http://www.sec.gov.

"Our first quarter is usually a slow quarter for our business, but this year revenues have grown early," said Mr. Yin. Shenping, Recon's Chief Executive Officer, "Benefited from our good reputation and long-term cooperation with our clients, we achieved more orders from our clients when they launched a new round replacement of furnaces and related accessories. We will continue our R&D activities to maintain stronger competitiveness and higher margin to secure our business. Besides, our other businesses like automation business and fracturing services, are all progressing smoothly. We will continue to make full use of our advantages and professional experience on oilfield automation and production stimulation-related services to achieve better and faster development".

About Recon Technology, Ltd.

Recon Technology, Ltd. is a non-state-owned oil field service company in China. The company has been providing software, equipment and services designed to increase the efficiency and automation in oil and gas exploration, extraction, production and refinery for Chinese oil and gas fields for more than 10 years. More information may be found at http://www.recon.cn or via e-mail at info@recon.cn.

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in reports filed by the company with the Securities and Exchange Commission.

All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

Investor Contact:
Recon Technology, Ltd.
Tel: +86-10-8494-5799

RECON TECHNOLOGY, LTD
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

	As of June 30,		As of September 30,		As of September 30,
	2012		2012		2012
ASSETS	RMB		RMB		U.S. Dollars
Current assets
Cash and cash equivalents	RMB	3,533,283	RMB	2,254,327	$	355,909
Trade accounts receivable, net		61,993,942		57,469,336		9,073,151
Trade accounts receivable- related parties, net		20,394,749		19,856,249		3,134,867
Inventories, net		24,281,300		24,097,816		3,804,518
Other receivables, net		8,074,096		10,816,095		1,707,625
Other receivables- related parties		17,729		445,494		70,334
Purchase advances, net		16,250,616		16,855,838		2,661,168
Purchase advances- related parties		1,093,534		993,534		156,857
Tax recoverable		2,790,722		1,572,640		248,286
Prepaid expenses		535,336		923,407		145,786
Deferred tax asset		1,106,801		1,075,177		169,747
Total current assets		140,072,108		136,359,913		21,528,248

Property and equipment, net		1,774,820		2,083,848		328,994
Long-term other receivable		10,302,349		8,627,720		1,362,128
Total Assets	RMB	152,149,277	RMB	147,071,481	$	23,219,370

LIABILITIES AND EQUITY
Current liabilities
Short-term bank loan	RMB	23,000,000	RMB	23,000,000	$	3,631,197
Trade accounts payable		11,905,560		9,093,488		1,435,663
Trade accounts payable- related parties		5,339,231		7,026,028		1,109,256
Other payables		2,341,826		1,659,640		262,021
Other payable- related parties		1,099,259		923,186		145,751
Deferred revenue		3,291,073		3,391,628		535,464
Advances from customers		936,124		1,286,993		203,188
Advances from customers- related parties		-		600,000		94,727
Accrued payroll and employees' welfare		949,579		1,017,375		160,621
Accrued expenses		476,416		539,742		85,213
Taxes payable		9,681,620		8,421,610		1,329,588
Short-term borrowings		2,767,066		1,817,883		287,004
Short-term borrowings- related parties		4,123,306		920,872		145,386
Total current liabilities		65,911,060		59,698,445		9,425,079

Long-term borrowings-related party		-		3,007,675		474,846
Total Liabilities		65,911,060		62,706,120		9,899,925

Commitments and Contingency

Equity
Common shares, ($ 0.0185 U.S. dollar par value, 25,000,000 shares authorized; 3,951,811 shares issued and outstanding as of June 30, 2012 and September 30, 2012)		529,979		529,979		83,672
Additional paid-in capital		67,643,791		68,126,955		10,755,755
Appropriated retained earnings		2,378,961		2,378,961		375,586
Unappropriated retained earnings		9,354,535		7,016,251		1,107,713
Accumulated other comprehensive loss		(290,496)		(306,458)		(48,383)
Total controlling shareholders' equity		79,616,770		77,745,688		12,274,343
Non-controlling interest		6,621,447		6,619,673		1,045,102
Total equity		86,238,217		84,365,361		13,319,445
Total Liabilities and Equity	RMB	152,149,277	RMB	147,071,481	$	23,219,370

RECON TECHNOLOGY, LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

	For the three months ended September 30,
	2011		2012		2012
	RMB		RMB		U.S. Dollars

Revenues
Hardware	RMB	3,593,772	RMB	8,438,964	$	1,332,329
Service		-		83,177		13,132
Hardware - related parties		1,348,817		532,051		83,999
Total revenues		4,942,589		9,054,192		1,429,460

Cost of revenues		2,465,443		6,608,767		1,043,380
Gross profit		2,477,146		2,445,425		386,080


Selling and distribution expenses		832,797		1,268,798		200,316
General and administrative expenses		4,876,183		3,516,440		555,169
Operating expenses		5,708,980		4,785,238		755,485


Loss from operations		(3,231,834)		(2,339,813)		(369,405)

Other income (expenses)
Interest income		6,332		1,310		207
Interest expense		(142,911)		(329,756)		(52,061)
Gain from foerign currency exchange		-		266,460		42,068
Other income (expense)		71,732		95,139		15,020

Loss before income taxes		(3,296,681)		(2,306,660)		(364,171)
Provision for income taxes		(108,515)		(31,624)		(4,993)
Net loss		(3,405,196)		(2,338,284)		(369,164)

Less: Net income attributable to non-controlling interest		-		5,882		930
Net loss attributable to Recon Technology, Ltd	RMB	(3,405,196)	RMB	(2,344,166)	$	(370,094)

Comprehensive Loss
Net loss		(3,405,196)		(2,338,284)		(369,164)
Foreign currency translation adjustment		7,594		(15,962)		(2,520)
Comprehensive loss		(3,397,602)		(2,354,246)		(371,684)
Comprehensive income attributable to non-controlling interest		759		7,656		1,209
Comprehensive loss attributable to Recon Technology, Ltd	RMB	(3,398,361)	RMB	(2,361,902)	$	(372,893)

Loss per common share - basic and diluted	RMB	(0.86)	RMB	(0.59)	$	(0.09)

Weighted - average shares -basic and diluted		3,951,811		3,951,811		3,951,811

RECON TECHNOLOGY, LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the three months ended September 30,
	2011		2012		2012
	RMB		RMB		U.S. Dollars

Cash flows from operating activities:
Net loss	RMB	(3,405,196)	RMB	(2,338,284)	$	(369,164)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation		88,723		72,379		11,427
Recovery of doubtful accounts		-		(413,622)		(65,302)
Stock based payments		263,364		454,805		71,804
Deferred tax provision		-		31,624		4,993
Changes in operating assets and liabilities:
Trade accounts receivable		2,499,209		5,011,902		791,270
Trade accounts receivable-related parties		-		538,500		85,017
Notes receivbale		1,276,574		-		-
Other receivable, net		(1,756,733)		(1,139,779)		(179,946)
Other receivables related parties, net		-		(427,764)		(67,535)
Purchase advance, net		(539,485)		(606,488)		(95,751)
Purchase advance-related party, net		-		100,000		15,788
Tax recorvable		-		1,218,082		192,308
Prepaid expense		81,866		(388,071)		(61,268)
Inventories		(1,247,809)		183,484		28,968
Trade accounts payable		1,457,908		(2,812,072)		(443,965)
Trade accounts payable-related parties		-		1,686,797		266,308
Other payables		102,887		(682,186)		(107,702)
Other payables-related parties		-		(176,073)		(27,798)
Deferred income		(504,800)		100,555		15,875
Advances from customers		(77,395)		950,869		150,121
Accrued payroll and employees' welfare		9,389		67,796		10,704
Accrued expenses		105,933		63,324		9,997
Taxes payable		283,529		(1,260,010)		(198,928)
Net cash provided by (used in) operating activities		(1,362,036)		235,768		37,221

Cash flows from investing activities:
Purchase of property and equipment		(101,131)		(381,406)		(60,216)
Net cash used in investing activities		(101,131)		(381,406)		(60,216)

Cash flows from financing activities:
Proceeds from borrowings-related parties		-		7,675		1,212
Repayment of short-term borrowings		-		(949,183)		(149,855)
Repayment of short-term borrowings-related parties		-		(202,434)		(31,960)
Net cash used in financing activities		-		(1,143,942)		(180,603)

Effect of exchange rate fluctuation on cash and cash equivalents		11,882		10,624		1,677

Net decrease in cash and cash equivalents		(1,451,285)		(1,278,956)		(201,921)
Cash and cash equivalents at beginning of period		3,485,944		3,533,283		557,830
Cash and cash equivalents at end of period	RMB	2,034,659	RMB	2,254,327	$	355,909


Supplemental cash flow information
Cash paid during the period for interest	RMB	134,637	RMB	407,215	$	64,290
Cash paid during the period for taxes	RMB	-	RMB	-	$	-

SOURCE Recon Technology, Ltd.

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