BEIJING, Nov. 17, 2010 /PRNewswire-Asia-FirstCall/ -- Recon Technology, Ltd. (Nasdaq: RCON) ("Recon" or the "Company"), a leading Chinese non-state-owned oil field services provider to oil and gas companies and their affiliates, has announced its financial results for the first fiscal quarter ended September 30, 2010. Summary financial data is provided below:

First Quarter Fiscal 2011 Financial Highlights

    --  Revenues for the first quarter of fiscal year 2011 decreased by 3.0%
        year-over-year to $3,254,551, down from $3,354,921 in the first quarter
        of fiscal 2010
    --  Net income for the first quarter increased 98.8% year-over-year to
        $125,969 compared with $63,364 for the first quarter of fiscal 2010
    --  Gross margin for the first quarter was 35.4% based on gross profit of
        $1,152,239, compared with a 10.6% margin in the same period last year
    --  Operating income and operating margin for the first quarter were
        $252,735 and 7.8%, respectively, compared to $193,217 and 5.8%,
        respectively, in the first quarter of fiscal 2010
    --  Earnings per diluted share were $0.03 for the quarter, compared with
        diluted EPS of $0.02 achieved in the same period a year ago

Shenping Yin, Recon's Chief Executive Officer, stated, "Net income nearly doubled during the first fiscal quarter, and our margins improved significantly. During the first quarter, which is traditionally our weakest sales quarter due to our clients' budgeting and planning cycles, we focused on executing a number of key projects in our considerable sales backlog. We expect a rebound in sales over the next few quarters as these projects are completed."

Mr. Yin continued, "The International Energy Agency recently projected that China will account for nearly half of the net growth in global oil demand through 2035. Additionally, the recent gas shortage in China highlighted the need for domestic natural gas providers to increase their production output to meet the nation's growing energy needs. We believe that large domestic oil and gas companies will need to upgrade their equipment and technology in the years ahead to remain competitive in their respective industries. Our strong working relationship with China's largest oil and gas providers, combined with our extensive industry expertise, gives us a major strategic advantage and positions us for continued growth in China's oilfield services market."

First Quarter Fiscal 2011 Results of Operations

Revenues

Revenues for the three months ended September 30, 2010 were $3,254,551 as compared to $3,354,921 for the three months ended September 30, 2009. The slight decrease of $100,370, or 3.0%, was primarily due to seasonality as well as the Company's continued execution of key projects in its sales backlog, which are expected to generate revenues upon their completion.

Gross Profit

Gross profit for the three months ended September 30, 2010 was $1,152,239 as compared to $955,353 for the three months ended September 30, 2009. The increase of $196,886, or 20.6%, was primarily due to an emphasis on higher-margin projects. Costs of sales for the three-month period were $2,102,312 as compared to $2,399,568 for the same period a year ago. The Company's gross margin was 35.4% and 10.6%, for the three months ended September 30, 2010 and 2009, respectively.

Income from Operations

Operating income for the three months ended September 30, 2010 amounted to $252,735 as compared to $193,217 for the three months ended September 30, 2009. The increase of $59,518 was primarily due to an emphasis on higher-margin projects. Operating expenses for the three-month period totaled $899,504 as compared to $762,137 for the same period a year ago.

Net Income

Net income for the three months ended September 30, 2010 was $125,969 as compared to $63,364 for the three months ended September 30, 2009, due to the reasons set forth above. Earnings per diluted share were $0.03 for the quarter, compared with diluted EPS of $0.02 for the same period a year ago.

Liquidity and Capital Resources

As of September 30, 2010, the Company's current assets were $25.8 million and current liabilities were $7.9 million. Cash and cash equivalents totaled $1.5 million as of September 30, 2010. The Company's shareholders' equity at September 30, 2010 was $26.0 million. The Company used $2,883 in cash for operating activities during the three months ended September 30, 2010, compared to cash provided by operating activities of $83,410 for the three months ended September 30, 2009. The Company used $991 in cash for investing activities during the three months ended September 30, 2010, compared to $11,321 for the three months ended September 30, 2009. The Company used $340,139 in cash for financing activities during the three months ended September 30, 2010, compared to cash provided by financing activities of $8,505,179 for the three months ended September 30, 2009.

Shareholder Meeting

Recon will hold its 2010 Annual Meeting of Shareholders on Wednesday, December 1, 2010, at 9:00 a.m. (Beijing time). The meeting will be held in Room 1801 of the King Long International Mansion, located at No. 9 Fulin Road, Beijing, P.R. China. Shareholders may also access the annual meeting via conference call. Instructions for accessing the call will be available on the Company's website at http://www.recon.cn.

About Recon Technology, Ltd.

Recon Technology, Ltd. has been providing leading Chinese oil and gas companies with automation services that increase efficiency and profitability in exploring, extracting, producing, processing, refining and transporting petroleum products for over 10 years. The company's proprietary computerized process control system manages oil production in real-time to increase extraction levels, reduce impurities in extracted petroleum and lower production costs. In addition, as one of only two acoustic system providers in the world, Recon's acoustic pipeline monitoring system is widely used to prevent gas leakage in the transport pipeline. Recon's technology is based on three software copyrights, eight product patents and four pending patents. Recon Technology is the first Chinese non-state-owned oil and gas service company to go public in the U.S.

More information may be found at http://www.recon.cn or via e-mail at info@recon.cn.

Forward-Looking Statements

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 field 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.

                                 RECON TECHNOLOGY, LTD
                       CONSOLIDATED STATEMENTS OF BALANCE SHEETS

                                             September 30,      June 30,
                                             -------------      --------
                                                      2010              2010
                                                      ----              ----
    ASSETS                                   U.S. Dollars       U.S. Dollars
                                             ------------       ------------
    Current assets                            (Unaudited)
    Cash and cash equivalents                   $1,464,275        $1,812,896
    Trade accounts receivable, net of
     allowance for doubtful accounts of
     RMB1,089,331 and
     RMB1,449,453($216,398), respectively       12,309,366        13,350,949
    Other receivables, net of allowance for
     doubtful accounts of  RMB1,089,331  and
     RMB96,527($14,411) respectively             2,381,945         1,918,536
    Purchase advances                            5,710,021         6,949,941
    Prepaid expenses                               124,917           114,456
    Inventories                                  3,728,662         1,963,379
    Deferred tax assets                             34,847            41,200
                                                    ------            ------
                                                25,754,033        26,151,357
    Property and equipment, net of
     accumulated depreciation of
     RMB1,190,970 and
     RMB1,289,567($192,527), respectively          207,659           221,388
                                                   -------           -------
                                               $25,961,692       $26,372,745
                                               ===========       ===========

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities
    Trade accounts payable                      $2,221,678        $2,468,879
    Other payables                                 500,330           462,267
    Deferred income                                553,763           637,152
    Advances from customers                         24,979            65,655
    Accrued payroll and employees' welfare          39,697            53,827
    Accrued expenses                                48,968            43,416
    Taxes payable                                2,780,612         3,016,244
    Short-term notes payable                       887,547           750,195
    Short-term notes payable-related parties       875,517         1,096,349
    Total current liabilities                    7,933,091         8,593,984
                                                 ---------         ---------
    Total Liabilities                            7,933,091         8,593,984
    Commitments and Contingencies

    Shareholders' equity
    Common shares, $0.0185 U.S. dollar par
     value, 25,000,000 shares authorized;
     3,951,811 and 3,951,811 shares issued
     and outstanding at June 30 and
     September 30, 2010                          79,124     79,124
    Additional paid-in capital                  10,405,803        10,339,812
    Appropriated retained earnings                 560,682           560,682
    Unappropriated retained earnings             5,516,204         5,379,809
    Accumulated other comprehensive loss           (16,129)          (11,495)

    Total controlling shareholders' equity      16,545,684        16,347,932
    Non-controlling interest, net of tax         1,482,917         1,430,830
                                                 ---------         ---------
    Total equity                                18,028,601        17,778,762
                                                ----------        ----------
    Total Liabilities and Equity               $25,961,692       $26,372,745
                                               ===========       ===========

                                 RECON TECHNOLOGY, LTD
               CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

                                      For the Three Months Ended Sep. 30
                                      ----------------------------------
                                                2010                 2009
                                                ----                 ----
                                      U.S. Dollars            U.S. Dollars
                                      ------------            ------------
                                        (Unaudited)          (Unaudited)
    Revenues
    Hardware                              $3,254,551           $2,877,181
    Service                                        -              443,926
    Software                                       -               33,815
                                                 ---               ------
    Total revenues                         3,254,551            3,354,921

    Cost of revenues                       2,102,312            2,399,568

    Gross margin                           1,152,239              955,353
                                           ---------              -------

    Selling and distribution expenses        269,204              322,362
    General and administrative
     expenses                                630,300              439,775

    Operating expenses                       899,504              762,137
                                             -------              -------

    Income from operations                   252,735              193,217
                                             -------              -------

    Other income (expenses)
    Subsidy income                            67,410                3,930
    Interest income                              207                  250
    Interest expense                         (16,936)              (6,158)
    Other income (expenses)                   (6,330)              10,969
                                              44,351                8,992
                                              ------                -----

    Income before income taxes and
     non-controlling interest                297,086              202,209
    Provision for income taxes              (120,307)            (103,414)

    Net income before allocation to
     non-controlling interests               176,779               98,794
    Less: Net income attributable to
     non-controlling interest                (50,810)             (35,430)
    Net income attributable to common
     shareholders                            125,969               63,364
                                             =======               ======

    Comprehensive income
     Net income before allocation to
      non-controlling interests              176,779               98,794
     Foreign currency translation
      adjustment                             (16,129)              (7,730)
                                             -------               ------
    Comprehensive income                     160,650               91,065
    Comprehensive income attributable
     to non-controlling interests            (49,197)             (34,657)
    Comprehensive income attributable
     to common shareholders                 $111,453              $56,407
                                            ========              =======
    Earnings per common share - basic
    Net income attributable to common
     shareholders                              $0.03                $0.02
                                               =====                =====
    Earnings per common share -
     diluted
    Net income attributable to common
     shareholders                              $0.03                $0.02
                                               =====                =====
    Weighted - average shares -basic       3,951,811            3,360,743
                                           =========            =========
    Weighted -average shares
     -diluted                              3,951,811            3,457,394
                                           =========            =========

                               RECON TECHNOLOGY, LTD.
                        CONSOLIDATED STATEMENTS OF CASH FLOWS

                                          For the Three Months Ended Sep.
                                                         30
                                          --------------------------------
                                                 2010                 2009
                                                 ----                 ----
                                        U.S. Dollars           U.S. Dollars
                                        ------------           ------------
                                         (Unaudited)          (Unaudited)
    Cash flows from operating
     activities:
    Net income before allocation to
     noncontrolling interests                $176,780              $98,794
    Adjustments to reconcile net income
     before noncontrolling interests to
     net cash
    provided by operating activities:
    Depreciation                               14,720               12,403
    Stock-based payment                        65,497               43,994
    Movement of deferred taxation               6,353             (111,646)
    Changes in operating assets and
     liabilities:
    Trade accounts receivable, net          1,041,582             (847,481)
    Trade accounts receivable-related
     parties, net                                   -               75,063
    Other receivables, net                   (206,750)            (143,584)
    Other receivables related parties,
     net                                            -              (34,510)
    Purchase advance, net                   1,252,089              438,175
    Prepaid expense                           (10,461)            (157,044)
    Inventories                            (1,765,283)            (530,379)
    Trade accounts payable                   (247,201)             809,426
    Trade accounts payable-related
     parties                                        -                2,110
    Other payables                             38,063               41,344
    Deferred income                           (83,390)             199,338
    Advances from customers                   (40,675)             (36,399)
    Accrued payroll and employees'
     welfare                                  (14,130)             (10,622)
    Accrued expenses                            5,552                1,790
    Taxes payable                            (235,628)             232,638
    Net cash provided by (used in)
     operating activities                      (2,883)              83,410
                                               ------               ------

    Cash flows from investing
     activities:
    Purchases of property and equipment          (991)             (11,321)
    Net cash used in investing
     activities                                  (991)             (11,321)
                                                 ----              -------
                                                                         -
    Cash flows from financing
     activities:                                                         -
    Proceeds from stock issuance                    -            8,988,976
    Proceeds from short-term notes
     payable                                  137,352             (186,835)
    Repayment for short-term notes
     payable-related party                   (220,832)            (296,962)
    Loan to third-party companies            (256,659)                   -
    Net cash provided by (used in)
     financing activities                    (340,139)           8,505,179
                                             --------            ---------
                                                                         -
    Effect of exchange rate fluctuation
     on cash and cash equivalents              (4,608)              (7,730)
                                               ------               ------
                                                                         -
    Net increase (decrease) in cash and
     cash equivalents                        (348,621)           8,569,538
    Cash and cash equivalents at
     beginning of period                    1,812,896              407,240
                                            ---------              -------
    Cash and cash equivalents at end of
     period                                $1,464,275           $8,976,778
                                           ==========           ==========

    Supplemental cash flow information
    Cash paid during the period for
     interest                                   2,687                    -
    Cash paid during the period for
     taxes                                   $242,729               $7,420
                                             ========               ======

This information is intended to be reviewed in conjunction with the Company's filings with the Securities and Exchange Commission, which includes the accompanying notes.

    Contact:

    At the Company:
    Recon Technology, Ltd
    Tel:   +86-10-8494-5799
    Email: info@recon.cn

    Investor Relations:
    Dave Gentry, U.S.
    RedChip Companies, Inc.
    Tel: +1-800-733-2447, Ext. 104
    Email: info@redchip.com

    Jing Zhang, China
    RedChip Beijing Representative Office
    Tel: +86 10-8591-0635
    Web: http://www.RedChip.com

SOURCE Recon Technology, Ltd.

SOURCE: Recon Technology, Ltd.