Recon Reports Fiscal Year 2014 First Quarter Financial Results

        Recon Reports Fiscal Year 2014 First Quarter Financial Results

Revenues Increase by 27.2% and Gross Profit Increases by 116.4% Compared to
2013 First Quarter Results

PR Newswire

BEIJING, Nov. 14, 2013

BEIJING, Nov. 14, 2013 /PRNewswire/ -- Recon Technology, Ltd (Nasdaq: RCON),
an oilfield services provider that operates primarily in the People's Republic
of China (the "Company"), today announced increased revenues and improved
operations in its fiscal year 2014 first quarter ended September 30, 2013.

Q1 Fiscal Year 2014 Highlights

  oTotal revenuesincreased by RMB 2.4 million or 27.2% in Q1FY2014 to RMB
    11.51 million($1.9 million), due to sales of furnaces and automation
    SCADA systems.
  oGross profits increased 116.4% in Q1FY2014 to RMB 5.29 million($0.9
    million). Gross marginimproved to 46% as compared to 27% for Q1FY2013.
  oIncome (loss) before income taxesshowed strong improvement from a loss of
    RMB 2.31 million to income of RMB 414 thousand ($67 thousand).
  oComprehensive net income(loss) attributable to Reconin Q1FY 2014 was
    approximatelyRMB 46 thousand ($8 thousand), an improvement of 102%
    compared tonet loss attributable to Recon ofRMB 2.34 million ($382
    thousand) for Q1FY 2013.
  oDiluted earnings per share attributable to Reconfor Q1FY 2014 wasRMB
    0.01 ($0.002), compared to diluted losses per share attributable to Recon
    of RMB 0.59 in Q1FY 2013.
  oAdjust EBITDAin FY 2013 was RMB 1.48 million ($0.2 million), showing an
    improvement of 186.3% over Q1FY 2013.

Mr. Yin Shenping, CEO of Recon, noted, "As most of our major projects are
still underway, our first quarter is usually a slower season. By contrast,
this year business continued to flourish in the first quarter, especially our
automation business and furnace business. Our focus on researching and
developing our own products and growing our brand name have paid off. We
expect this focus on self developed systems and other specialized oilfield
products will continue to benefit our company in the future".

Mr. Yin continued, "As our traditional business improved, our new business,
fracturing and shale gas automation systems sales also expanded. As our
product lines continue to improve and become more integrated, our ability to
provide a robust package of solutions to our customers will strengthen. We
believe this focus on providing integrated services will provide us a
competitive advantage and maximize our profit capability".

Q1 Fiscal Year 2014 Results

Total revenuesincreased by 27.2%, or approximately RMB2.4 million ($0.4
million), from RMB9.1 million for the three months ended September 30, 2012 to
RMB11.5 million ($1.9 million) for the same period of 2013. This increased was
mainly driven by automation business and sales of furnaces.

Gross profit increased to approximately RMB5.3 million ($0.9 million) for the
three months ended September 30, 2013 from approximately RMB2.4 million for
the same period in 2012. Our gross profit as a percentage of revenue increased
to 46.0% for the three months ended September 30, 2013 from 27.0% for the same
period in 2012.

Selling and distribution expenses increased by 6.7%, from approximately RMB1.3
million for the three months ended September 30, 2012 to approximately RMB1.4
million ($0.2 million) for the same period of 2013. This increase was
primarily from increased service charges.

General and administrative expenses increased by 38.3%, or RMB0.8 million
($0.1 million), from approximately RMB2 million in the three months ended
September 30, 2012 to approximately RMB2.7 million ($0.5 million) in the same
period of 2013. General and administrative expenses were 21.9% of total
revenues in 2012 and 23.8% of total revenues in 2013.

Research and development expenses decreased by 54.8%, from approximately
RMB1.5 million for the three months ended September 30, 2012 to approximately
RMB0.7 million ($0.1 million) for the same period of 2013. This decrease was
primarily we devoted fewer resources to R&D for our furnaces and fracturing
services in the 2013 period.

Income from operations was approximately RMB0.5 million ($0.1 million) for the
three months ended September 30, 2013, compared to a loss from operations of
RMB2.3 million for the same period of 2012. This increase in income from
operations can be attributed primarily to the increased revenue, improved
gross margins, decreased research and development expenses and decreased
percentage of revenue for selling and distribution expenses.

Net income attributable to ordinary shareholders was RMB46,444 ($7,569) for
the three months ended September 30, 2013, an increase of approximately RMB2.4
million ($0.4 million) from net loss attributable to ordinary shareholders of
RMB2.3 million for the same period of 2012.

Adjusted EBITDA improved by approximately RMB3.2 million ($0.5 million) to
approximately RMB1.5 million ($0.2 million) for the three months ended
September 30, 2013 compared to approximately RMB1.7 million loss for the same
period in 2012. This was due to improved operation. Compared to net income
attributable to ordinary shareholders, we believe EBITDA more accurately
reflects our operations.

As of September 30, 2013, we had cash and cash equivalents in the amount of
approximately RMB6.7 million ($1.1 million). Except for approximately RMB0.8
million ($0.1 million) of short-term borrowings, RMB0.9 million ($0.1 million)
in lease commitments and RMB17.56 million ($2.9 million) in commercial loans
from local banks, we did not have any finance leases or purchase commitments,
guarantees or other material contingent liabilities.

Net cash used in operating activities totaled approximately RMB8.0 million
($1.3 million) for the three months ended September 30, 2013. This was a
decrease of approximately RMB8.2 million ($1.3 million) compared to net cash
provided by operating activities of approximately RMB236 thousand for the
quarter ended September 30, 2012. This increase was mainly because we
purchased goods in preparation for coming projects.

Net cash used in investing activities was RMB6,720 ($1,095) for the three
months ended September 30, 2013, a decrease of RMB374,686 ($61,060) from
RMB381,406 for the same period of 2012. The decrease was due to a decrease in
purchase of property and equipment.

Net cash provided by financing activities amounted to approximately RMB2.3
million ($0.4 million) for the three months ended September 30, 2013, compared
to cash flows used in financing activities of approximately RMB1.1 million for
the three months ended September 30, 2012. During the three-month period ended
September 30, 2013, we repaid approximately RMB5.2 million ($0.9 million) of
short term borrowings to related parties and received RMB7.56 million ($1.2
million) of loan proceeds from a commercial bank, which was guaranteed by one
of our shareholders.

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 athttp://www.recon.cn or via
e-mail atinfo@recon.cn or liu.jia@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,
                         2013             2013                 2013
ASSETS                   RMB              RMB                  U.S. Dollars
Current assets
Cash and cash            RMB 12,350,392   RMB   6,681,903      $   1,088,896
equivalents
Notes receivable             2,578,855          -                  -
Trade accounts               38,648,780         35,887,868         5,848,359
receivable, net
Trade accounts
receivable- related          18,744,364         18,575,786         3,027,147
parties, net
Inventories, net             13,271,070         17,944,490         2,924,270
Other receivables, net      19,131,503         17,095,176         2,785,864
Other receivables-           742,528            1,171,227          190,865
related parties
Purchase advances, net       18,412,507         20,511,358         3,342,572
Purchase advances-           394,034            394,034            64,213
related parties
Tax recoverable              575,650            774,874            126,275
Prepaid expenses            2,853,956          3,078,229          501,633
Deferred tax asset           1,006,721          994,853            162,123
Total current assets         128,710,360        123,109,798        20,062,217
Property and equipment,      1,709,846          1,566,198          255,231
net
Long-term investment         1,549,450          1,174,836          191,454
Long-term other              3,502,680          7,254,709          1,182,242
receivable
Total Assets             RMB 135,472,336  RMB   133,105,541    $   21,691,144
LIABILITIES AND EQUITY
Current liabilities
Short-term bank loans    RMB 10,000,000   RMB   17,560,000     $   2,861,613
Trade accounts payable       7,384,165          8,474,376          1,381,001
Trade accounts payable-      3,994,718          -                  -
related parties
Other payables              1,964,691          951,117            154,996
Other payable- related       4,239,675          2,670,768          435,234
parties
Deferred revenue             3,381,382          3,459,866          563,827
Advances from customers      470,700            435,315            70,940
Accrued payroll and          1,992,783          2,129,041          346,953
employees' welfare
Accrued expenses             488,730            498,273            81,200
Taxes payable                6,754,428          6,765,824          1,102,572
Short-term borrowings-       5,503,279          266,902            43,495
related parties
Short-term borrowings-       570,375            530,375            86,431
other
Total current                46,744,926         43,741,857         7,128,262
liabilities
Commitments and
Contingency
Equity
Common stock, ($ 0.0185
U.S. dollar par value,
25,000,000 shares
authorized; 3,951,811
shares issued and            529,979            529,979            86,364
outstanding as of June
30,
2013 and September 30,
2013)
Additional paid-in           69,516,447         69,951,973         11,399,513
capital
Appropriated retained        3,023,231          3,310,881          539,548
earnings
Unappropriated retained      8,749,963          8,508,756          1,386,604
earnings
Accumulated other            (293,201)          (297,985)          (48,560)
comprehensive loss
Total controlling            81,526,419         82,003,604         13,363,469
shareholders' equity
Non-controlling interest     7,200,991          7,360,080          1,199,413
Total equity                 88,727,410         89,363,684         14,562,882
Total Liabilities and    RMB 135,472,336  RMB   133,105,541    $   21,691,144
Equity
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements





RECON TECHNOLOGY, LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME (LOSS)
                                For the three months ended
                                September 30,
                                    2012              2013        2013
                                    RMB               RMB         USD
Revenues
Hardware and software           RMB 8,438,964    RMB  11,097,092  $ 1,808,404
Service                             83,177            -             -
Hardware and software - related     532,051           415,618       67,730
parties
Total revenues                      9,054,192         11,512,710    1,876,134
Cost of revenues
Hardware and software           RMB 5,766,562    RMB  6,118,674   $ 997,111.35
Service                             20,620            -             -
Hardware and software - related     821,585           102,936       16,775
parties
Total cost of revenues              6,608,767         6,221,610     1,013,886
Gross profit                        2,445,425         5,291,100     862,248
Selling and distribution            1,268,798         1,353,922     220,638
expenses
General and administrative          1,983,111         2,741,923     446,829
expenses
Research and development            1,533,329         692,600       112,867
expenses
Operating expenses                  4,785,238         4,788,445     780,334
Income (loss) from operations       (2,339,813)       502,655       81,914
Other income (expenses)
Subsidy income                      -                 333,712       54,382
Interest income                     1,310             103,201       16,818
Interest expense                    (329,756)         (221,259)     (36,057)
Loss from equity method             -                 (374,614)     (61,048)
investment
Gain from foreign currency          266,460           94,300        15,367
exchange
Other income (expense)              95,139            (24,314)      (3,962)
Income (loss) before income tax     (2,306,660)       413,681       67,414
Provision for income tax            31,624            207,327       33,786
Net Income (loss)                   (2,338,284)       206,354       33,628
Less: Net income attributable       5,882             159,910       26,059
to non-controlling interest
Net Income (loss) attributable                  
to Recon Technology, Ltd            (2,344,166)       46,444      $ 7,569
                                RMB              RMB
Comprehensive income (loss)
Net income (loss)                   (2,338,284)       206,354       33,628
Foreign currency translation        (15,962)          (5,604)       (913)
adjustment
Comprehensive income (loss)         (2,354,246)       200,750       32,715
Less: Comprehensive income
attributable to non-controlling     7,656             159,349       25,968
interest
Comprehensive income (loss)                     
attributable to Recon               (2,361,902)       41,401      $ 6,747
Technology, Ltd                 RMB              RMB
Earnings (loss) per common                      
share - basic                      (0.59)            0.01        $ 0.00
                                RMB              RMB
Earnings per common share -                     
diluted                             (0.59)            0.01        $ 0.00
                                RMB              RMB
Weighted - average shares           3,951,811         3,951,811     3,951,811
-basic
Weighted - average shares           3,951,811         3,951,811     3,951,811
-diluted
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements









RECON TECHNOLOGY, LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                               For the three months ended September 30,
                               2012             2013             2013
                               RMB              RMB              U.S. Dollars
Cash flows from operating
activities:
Net income (loss)              RMB (2,338,284)  RMB 206,354      $ 33,628
Adjustments to reconcile net
income (loss) to net cash
provided
by (used in) operating
activities:
Depreciation                       72,379           150,368        24,504
Provision/(recovery of) for        (413,622)        84,728         13,807
doubtful accounts
Stock based compensation           454,805          414,954        67,622
Loss from investment               -                374,614        61,048
Deferred tax                       31,624           11,868         1,934
(benifit)/provision
Changes in operating assets
and liabilities:
Trade accounts receivable          5,011,902        2,568,115      418,505
Trade accounts                     538,500          263,726        42,977
receivable-related parties
Inventories                        183,484          (4,673,420)    (761,590)
Notes receivable                   -                2,578,855      420,255
Other receivable, net              (1,139,779)      (1,703,837)    (277,662)
Other receivables related          (427,764)        (428,699)      (69,862)
parties, net
Purchase advance, net              (606,488)        (2,097,795)    (341,861)
Purchase advance-related           100,000          -              -
party, net
Tax recoverable                    1,218,082        (199,225)      (32,466)
Prepaid expense                    (388,071)        (224,273)      (36,548)
Trade accounts payable             (2,812,072)      1,090,211      177,663
Trade accounts payable-related     1,686,797        (3,994,718)    (650,987)
parties
Other payables                     (682,186)        (1,013,574)    (165,174)
Other payables-related parties     (176,073)        (1,568,907)    (255,672)
Deferred income                    100,555          78,484         12,790
Advances from customers            950,869          (35,385)       (5,766)
Accrued payroll and employees'     67,796           136,258        22,205
welfare
Accrued expenses                   63,324           9,543          1,555
Taxes payable                      (1,260,010)      11,396         1,857
Net cash provided by (used in)     235,768          (7,960,359)    (1,297,238)
operating activities
Cash flows from investing
activities:
Purchase of property and           (381,406)        (6,720)        (1,095)
equipment
Net cash used in investing         (381,406)        (6,720)        (1,095)
activities
Cash flows from financing
activities:
Proceeds from short-term bank      -                7,560,000      1,231,993
loans
Proceeds from                      7,675            -              -
borrowings-related parties
Repayment of short-term            (202,434)        (5,236,377)    (853,330)
borrowings-related parties
Repayment of short-term           (949,183)        (40,000)       (6,518)
borrowings
Net cash provided by (used in)     (1,143,942)      2,283,623      372,145
financing activities
Effect of exchange rate
fluctuation on cash and cash       10,624           14,967         2,438
equivalents
Net decrease in cash and cash      (1,278,956)      (5,668,489)    (923,750)
equivalents
Cash and cash equivalents at       3,533,283        12,350,392     2,012,646
beginning of period
Cash and cash equivalents at   RMB 2,254,327    RMB 6,681,903    $ 1,088,896
end of period
                                                    0              -
Supplemental cash flow
information
Cash paid during the period    RMB 407,215      RMB 212,187      $ 34,578
for interest
Cash paid during the period    RMB -            RMB -            $ -
for taxes
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements

SOURCE Recon Technology, Ltd

Website: http://www.recon.cn
 
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