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Recon Reports fiscal year 2012 Financial Results
PR Newswire
BEIJING

BEIJING, Oct. 1, 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 fiscal year 2012 ended June 30, 2012.

Fiscal Year 2012 Highlights

    --  Total revenues increased by 18.61% in fiscal year 2012 to RMB 75.54
        million ($11.95 million), due to the company's move into the horizontal
        fracturing business and development of overseas business.
    --  Gross profits increased 20.05% in fiscal year 2012 were RMB24.27 million
        ($3.84 million).
    --  Gross margin was 32.13%, compared to 31.75% in FY 2011.
    --  Operating loss in fiscal year 2012 decreased by 81.93% to RMB3.54
        mullion ($560 thousand) from FY 2011.
    --  Comprehensive loss attributable to Recon in fiscal year 2012 was RMB3.82
        million ($605 thousand), an 86.84% decrease from FY2011.
    --  Diluted Losses per Share attributable to Recon for fiscal year 2012 was 
        RMB0.97 ($0.15), a reduction of 86.8% from diluted losses per share of
        RMB7.35 in 2011.
    --  Adjust EBITDA in fiscal year 2012 was a loss of RMB1.29 million ($204
        thousand), an improvement of 92.28% from FY 2011.

"I'm pleased that we closed the year with improved operating results," said Mr. Yin Shenping, CEO of Recon, "The high-end segment of China's oilfield service industry has opened more to private companies, and we believe there are opportunities for Chinese oilfield services companies, especially experienced companies that can provide all-in-one solutions for customers. As a small company, Recon now is more focused on oilfield automation and production stimulation-related services. But we also seek to extend our business on the industrial chain by providing more integrated services and incremental measures and growing our business from a predominantly up-ground business to include some down-hole services as well. We believe our experience and reputation will help us remain competitive in this arena."

Fiscal Year 2012 Results

Total revenues for the year ended June 30, 2012 were RMB75.54 million ($11.95 million), an increase of RMB11.85 million or 18.61%. The deconsolidation of ENI was responsible for a decrease of RMB18.68 million in hardware and hardware-related revenues. Excluding the effect of deconsolidating ENI, our operating revenue increased by RMB30.54 million, or 67.85%

Gross profit increased by RMB4.05 million ($641 thousand), or 20.05%, to RMB24.27 million ($3.84 million) for fiscal year 2012. Gross profit as a percentage of revenues increased slightly from 31.75% to 32.13%.

Selling and distribution expenses decreased by RMB2.68 million, or 34.67%, from RMB7.74 million for the year ended June 30, 2011 to RMB 5.05 million ($780 thousand) for the same period of 2012 as a result of focusing our selling efforts on a more limited number of clients.

General and administrative expenses decreased by RMB9.30 million ($1.47 million), or 29.01%, from RMB32.06 million in FY2011 to RMB22.76 million ($3.60 million) in the same period of 2012, which was mainly attributable to deconsolidation of ENI during the fiscal year 2011, offset by increase in expenses in research and development activities, staff wages, in order to retain talented staff and SOX compliance services.

Loss from operations was RMB3.54 million ($560 thousand) for FY2012, an improvement of RMB16.03 million, or 81.93%, from a loss of RM19.57 million for 2011. This improvement in operations is attributed primarily to the deconsolidation of ENI, increase in revenues and reduction in expenses during this year.

Net loss attributable to ordinary shareholders was RMB3.82 million ($605 thousand) for the year ended June 30, 2012, an improvement of RMB25.22 million or 86.84%, from a loss of RMB29.04 million for same period of 2011.

As of June 30, 2012, cash and cash equivalents was RMB3.53 million ($553 thousand). Except for RMB6.89 million ($1.09 million) of short-term borrowings and RMB23 million ($3.64 million) short-term bank loan, there were no other financing activities and contingent liabilities.

Net cash used in operating activities was RMB21.87 million ($3.46 million) for the year ended June 30, 2012, an increase of RMB15.54 million ($2.46 million) from RMB6.33 million for the same period of 2011. The increase in the use of cash in the current period was due to an increase in trade accounts receivable and purchase advances, which resulted from increased business activities, offset by the increased in inventory turnover and accounts payable.

Net cash provided in financing activities was RMB22.74 million ($3.60 million) for the year ended June 30, 2012, compared to net cash provided by financing activities amounting to RMB2.62 million for the same period of 2011. The increase in net cash provided by financing activities was mainly due to the increase of bank loans and short-term borrowings from related parties to supplement our working capital.

Net cash used in investing activities was RMB840 thousand ($133 thousand) for the year ended June 30, 2012, a decrease of RMB1.59 million from RMB2.43 million for the same period of 2011. The decrease was mainly caused by a loss on cash due to the deconsolidation of ENI amounting to RMB2.56 million in the fiscal 2011, while there was no such loss for the same period of 2012.

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 [email protected]

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.
                                                      CONSOLIDATED BALANCE SHEETS


                             As of June 30,              As of June 30,           As of June 30,
                             --------------              --------------           --------------
                                       2011                        2012                             2012
                                       ----                        ----                             ----
    ASSETS                        RMB                          RMB                 U.S. Dollars
                                  ---                          ---                 ------------
    Current assets
    Cash and cash
     equivalents            RMB               3,485,944                  RMB                   3,533,283     $559,090
    Notes receivable                          1,276,574                                                -            -
    Trade accounts
     receivable, net                         22,329,705                                       61,993,942    9,809,634
    Trade accounts
     receivable- related
     parties, net                            25,983,172                                       20,394,749    3,227,170
    Inventories, net                         22,576,094                                       24,281,300    3,842,160
    Other receivables, net                    6,128,794                                        8,074,096    1,277,608
    Other receivables-
     related parties                          4,383,000                                           17,729        2,805
    Purchase advances, net                   12,152,896                                       16,250,616    2,571,422
    Purchase advances-
     related parties                            989,828                                        1,093,534      173,036
    Tax recoverable                                   -                                        2,790,722      441,591
    Prepaid expenses                          1,016,299                                          535,336       84,709
    Deferred tax asset                          458,133                                        1,106,801      175,135
                                                -------                                        ---------      -------
    Total current assets                    100,780,439                                      140,072,108   22,164,360

    Property and equipment,
     net                                      1,132,425                                        1,774,820      280,839
    Long-term other
     receivable                              12,971,481                                       10,302,349    1,630,196
                                             ----------                                       ----------    ---------
    Total Assets            RMB             114,884,345                  RMB                 152,149,277  $24,075,395
                            ===             ===========                  ===                 ===========  ===========

    LIABILITIES AND EQUITY
    Current liabilities
    Short-term bank loan    RMB               5,000,000                  RMB                  23,000,000   $3,639,413
    Trade accounts payable                    6,320,488                                       11,905,560    1,883,881
    Trade accounts payable-
      related parties                                 -                                        5,339,231      844,855
    Other payables                            1,960,924                                        2,341,826      370,560
    Other payable- related
     parties                                     61,477                                        1,099,259      173,942
    Deferred revenue                          2,420,497                                        3,291,073      520,764
    Advances from customers                     782,945                                          936,124      148,128
    Accrued payroll and
     employees' welfare                         157,824                                          949,579      150,257
    Accrued expenses                            345,015                                          476,416       75,384
    Taxes payable                             7,192,123                                        9,681,620    1,531,975
    Short-term borrowings                     1,743,286                                        2,767,066      437,848
    Short-term borrowings-
      related parties                           911,399                                        4,123,306      652,453
    Total current
     liabilities                             26,895,978                                       65,911,060   10,429,460
                                             ----------                                       ----------   ----------
    Total Liabilities                        26,895,978                                       65,911,060   10,429,460

    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, 2011
     and 2012)                                  529,979                                          529,979       83,861
    Additional paid-in
     capital                                 65,877,686                                       67,643,791   10,703,640
    Appropriated retained
     earnings                                 2,058,429                                        2,378,961      376,436
    Unappropriated retained
     earnings                                13,495,199                                        9,354,535    1,480,218
    Accumulated other
     comprehensive loss                        (288,897)                                        (290,496)     (45,967)
    Total controlling
     shareholders' equity                    81,672,396                                       79,616,770   12,598,188
    Non-controlling
     interest                                 6,315,971                                        6,621,447    1,047,747
                                              ---------                                        ---------    ---------
    Total equity                             87,988,367                                       86,238,217   13,645,935
                                             ----------                                       ----------   ----------
    Total Liabilities and
     Equity                 RMB             114,884,345                  RMB                 152,149,277  $24,075,395
                            ===             ===========                  ===                 ===========  ===========

    RECON TECHNOLOGY, LTD.
    CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

                                                               For the year ended June 30,
                                                               ---------------------------
                                                                                          2011                2012          2012
                                                                                          ----                ----          ----
                                                                             RMB                    RMB             U.S. Dollars
                                                                             ---                    ---             ------------

    Revenues
    Hardware                                    RMB                                 41,677,918  RMB     49,693,929               $7,863,337
    Service                                                                                  -          13,985,465                2,212,995
    Software                                                                         2,111,111           3,952,991                  625,503
    Hardware - related parties                                                      19,899,438           7,909,994                1,251,641
                                                                                    ----------           ---------                ---------
    Total revenues                                                                  63,688,467          75,542,379               11,953,476

    Cost of revenues                                                                43,469,506          51,269,950                8,112,719
    Gross margin                                                                    20,218,961          24,272,429                3,840,757
                                                                                    ----------          ----------                ---------


    Selling and distribution
     expenses                                                                        7,736,091           5,054,219                  799,756
    General and administrative
     expenses                                                                       32,055,652          22,755,891                3,600,787
    Operating expenses                                                              39,791,743          27,810,110                4,400,543
                                                                                    ----------          ----------                ---------


    Loss from operations                                                           (19,572,782)         (3,537,681)                (559,786)
                                                                                   -----------          ----------                 --------

    Other income (expenses)
    Subsidy income                                                                     822,545             554,856                   87,798
    Interest income                                                                      1,463             335,517                   53,091
    Interest expense                                                                  (600,500)           (962,824)                (152,353)
    Gain or loss from currency
     exchange                                                                           35,846             (46,303)                  (7,327)
    Other income (expense)                                                             279,664             (78,097)                 (12,358)
    Loss on deconsolidation                                                         (8,989,614)                  -                        -
                                                                                    ----------                 ---                      ---
    Loss before income taxes                                                       (28,023,378)         (3,734,532)                (590,935)
    Benefit (provision) for
     income taxes                                                                     (665,146)            220,050                   34,820
    Net loss                                                                       (28,688,524)         (3,514,482)                (556,115)
    Less: Net income
     attributable to non-
     controlling interest                                                              347,851             305,653                   48,365
    Net loss attributable to
     Recon Technology, Ltd                      RMB                                (29,036,375) RMB     (3,820,135)               $(604,480)
                                                ===                                ===========  ===     ==========                =========
    Comprehensive Loss
    Net loss                                                                       (28,688,524)         (3,514,482)                (556,115)
    Foreign currency
     translation adjustment                                                           (211,900)             (1,599)                    (253)
                                                                                      --------              ------                     ----
    Comprehensive loss                                                             (28,900,424)         (3,516,081)                (556,368)
    Comprehensive income
     attributable to non-
     controlling interest                                                              324,307             305,830                   48,393
                                                                                       -------             -------                   ------
    Comprehensive loss
     attributable to Recon
     Technology, Ltd                            RMB                                (29,224,731) RMB     (3,821,911)               $(604,761)
                                                ===                                ===========  ===     ==========                =========

    Loss per common share -
     basic and diluted                          RMB                                      (7.35) RMB          (0.97)                  $(0.15)
                                                ===                                      =====  ===          =====                   ======

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

    RECON TECHNOLOGY, LTD.
    CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                               For the year ended June 30,
                                                                                               ---------------------------
                                                                                          2011                     2012                          2012
                                                                                          ----                     ----                          ----
                                                                                     RMB                         RMB                     U.S. Dollars
                                                                                     ---                         ---                     ------------

    Cash flows from operating activities:
    Net loss                                                                    RMB             (28,688,524)             RMB               (3,514,482)             $(556,115)
    Adjustments to reconcile net loss to net cash used in operating activities:
    Loss on deconsolidation                                                          8,989,614                                        -                       -
    Depreciation                                                                                     361,837                                  197,873                 31,310
    Provision for doubtful accounts                                                                                           3,919,052                 620,133
    Stock based payments                                                                           1,420,588                                1,239,788                196,178
    Deferred tax benefit                                                                            (182,173)                                (648,668)              (102,642)
    Changes in operating assets and liabilities:
    Trade accounts receivable                                                                      7,406,206                             (42,916,527)            (6,790,912)
    Trade accounts receivable-related parties                                                      9,947,112                                5,588,423                884,286
    Notes receivbale                                                                              (1,276,574)                               1,276,574                201,999
    Other receivable, net                                                                          3,987,998                                  447,706                 70,843
    Other receivables related parties, net                                                        (1,226,488)                               4,365,271                690,740
    Purchase advance, net                                                                         18,150,896                               (4,488,357)              (710,217)
    Purchase advance-related party, net                                                            8,947,200                                 (103,706)               (16,410)
    Tax recorvable                                                                           -                               (2,790,722)               (441,591)
    Prepaid expense                                                                                 (269,661)                                 480,963                 76,105
    Inventories                                                                                 (23,287,337)                               (1,705,206)              (269,824)
    Trade accounts payable                                                                        (4,747,743)                               5,585,072                883,756
    Trade accounts payable-related parties                                                   -                                5,339,231                 844,855
    Other payables                                                                                (1,183,142)                                 380,902                 60,272
    Other payables-related parties                                                                   133,206                                1,037,782                164,214
    Deferred income                                                                               (1,795,986)                                 870,576                137,756
    Advances from customers                                                                          334,678                                  153,179                 24,238
    Accrued payroll and employees' welfare                                                          (176,235)                                 791,755                125,284
    Accrued expenses                                                                                  54,212                                  131,401                 20,792
    Taxes payable                                                                                 (3,231,315)                               2,489,497                393,926
    Net cash used in operating activities                                                         (6,331,632)                            (21,872,623)            (3,461,024)
                                                                                                  ----------                              -----------             ----------

    Cash flows from investing activities:
    Purchase of property and equipment                                                              (173,089)                                (840,268)              (132,960)
    Cash effect of deconsolidating VIE                                              (2,256,305)                                       -                       -
    Net cash used in investing activities                                                         (2,429,394)                                (840,268)              (132,960)
                                                                                                  ----------                                 --------               --------

    Cash flows from financing activities:
    Proceeds from short-term bank loan                                                             5,000,000                               23,000,000              3,639,413
    Repayments of short-term bank loan                                                       -                               (5,000,000)               (791,177)
    Proceeds from other receivables-loans                                            3,216,000
    Proceeds from short-term borrowings                                                              168,317                                2,153,780                340,804
    Proceeds from short-term borrowings-related party                                                                         4,991,907                 789,896
    Repayments of  short-term borrowings                                                          (5,343,082)                              (1,130,000)              (178,806)
    Repayments of short-term borrowings-related party                                             (2,700,000)                              (1,780,000)              (281,659)
    Capital contribution in VIE                                                              -                                  500,000                  79,118
    Net cash provided by financing activities                                                        341,235                               22,735,687              3,597,589
                                                                                                     -------                               ----------              ---------

    Effect of exchange rate fluctuation on cash and cash equivalents                                (237,222)                                  24,543                  3,884
                                                                                                    --------                                   ------                  -----

    Net increase (decrease) in cash and cash equivalent                                           (8,657,013)                                  47,340                  7,490
    Cash and cash equivalents at beginning of year                                                12,142,957                                3,485,944                551,600
                                                                                                  ----------                                ---------                -------
    Cash and cash equivalents at end of year                                    RMB                3,485,944             RMB                3,533,284               $559,090
                                                                                ===                =========             ===                =========               ========


    Supplemental cash flow information
    Cash paid during the year for interest                                      RMB                  401,529             RMB                  442,719                $70,054
                                                                                ===                  =======             ===                  =======                =======
    Cash paid during the year for taxes                                         RMB                3,700,671             RMB                  494,087                $78,182
                                                                                ===                =========             ===                  =======                =======

SOURCE Recon Technology, Ltd.

SOURCE: Recon Technology, Ltd.

Recon Reports fiscal year 2012 Financial Results

PR Newswire

BEIJING, Oct. 1, 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 fiscal year 2012 ended June 30, 2012.

Fiscal Year 2012 Highlights

  • Total revenues increased by 18.61% in fiscal year 2012 to RMB 75.54 million ($11.95 million), due to the company's move into the horizontal fracturing business and development of overseas business.
  • Gross profits increased 20.05% in fiscal year 2012 were RMB24.27 million ($3.84 million).
  • Gross margin was 32.13%, compared to 31.75% in FY 2011.
  • Operating loss in fiscal year 2012 decreased by 81.93% to RMB3.54 mullion ($560 thousand) from FY 2011.
  • Comprehensive loss attributable to Recon in fiscal year 2012 was RMB3.82 million ($605 thousand), an 86.84% decrease from FY2011. 
  • Diluted Losses per Share attributable to Recon for fiscal year 2012 was  RMB0.97 ($0.15), a reduction of 86.8% from diluted losses per share of RMB7.35 in 2011.
  • Adjust EBITDA in fiscal year 2012 was a loss of RMB1.29 million ($204 thousand), an improvement of 92.28% from FY 2011.

"I'm pleased that we closed the year with improved operating results," said Mr. Yin Shenping, CEO of Recon, "The high-end segment of China's oilfield service industry has opened more to private companies, and we believe there are opportunities for Chinese oilfield services companies, especially experienced companies that can provide all-in-one solutions for customers. As a small company, Recon now is more focused on oilfield automation and production stimulation-related services. But we also seek to extend our business on the industrial chain by providing more integrated services and incremental measures and growing our business from a predominantly up-ground business to include some down-hole services as well. We believe our experience and reputation will help us remain competitive in this arena."

Fiscal Year 2012 Results

Total revenues for the year ended June 30, 2012 were RMB75.54 million ($11.95 million), an increase of RMB11.85 million or 18.61%. The deconsolidation of ENI was responsible for a decrease of RMB18.68 million in hardware and hardware-related revenues. Excluding the effect of deconsolidating ENI, our operating revenue increased by RMB30.54 million, or 67.85%

Gross profit increased by RMB4.05 million ($641 thousand), or 20.05%, to RMB24.27 million ($3.84 million) for fiscal year 2012. Gross profit as a percentage of revenues increased slightly from 31.75% to 32.13%.

Selling and distribution expenses decreased by RMB2.68 million, or 34.67%, from RMB7.74 million for the year ended June 30, 2011 to RMB 5.05 million ($780 thousand) for the same period of 2012 as a result of focusing our selling efforts on a more limited number of clients. 

General and administrative expenses decreased by RMB9.30 million ($1.47 million), or 29.01%, from RMB32.06 million in FY2011 to RMB22.76 million ($3.60 million) in the same period of 2012, which was mainly attributable to deconsolidation of ENI during the fiscal year 2011, offset by increase in expenses in research and development activities, staff wages, in order to retain talented staff and SOX compliance services.

Loss from operations was RMB3.54 million ($560 thousand) for FY2012, an improvement of RMB16.03 million, or 81.93%, from a loss of RM19.57 million for 2011. This improvement in operations is attributed primarily to the deconsolidation of ENI, increase in revenues and reduction in expenses during this year.

Net loss attributable to ordinary shareholders was RMB3.82 million ($605 thousand) for the year ended June 30, 2012, an improvement of RMB25.22 million or 86.84%, from a loss of RMB29.04 million for same period of 2011.

As of June 30, 2012, cash and cash equivalents was RMB3.53 million ($553 thousand). Except for RMB6.89 million ($1.09 million) of short-term borrowings and RMB23 million ($3.64 million) short-term bank loan, there were no other financing activities and contingent liabilities.

Net cash used in operating activities was RMB21.87 million ($3.46 million) for the year ended June 30, 2012, an increase of RMB15.54 million ($2.46 million) from RMB6.33 million for the same period of 2011. The increase in the use of cash in the current period was due to an increase in trade accounts receivable and purchase advances, which resulted from increased business activities, offset by the increased in inventory turnover and accounts payable.

Net cash provided in financing activities was RMB22.74 million ($3.60 million) for the year ended June 30, 2012, compared to net cash provided by financing activities amounting to RMB2.62 million for the same period of 2011. The increase in net cash provided by financing activities was mainly due to the increase of bank loans and short-term borrowings from related parties to supplement our working capital.

Net cash used in investing activities was RMB840 thousand ($133 thousand) for the year ended June 30, 2012, a decrease of RMB1.59 million from RMB2.43 million for the same period of 2011. The decrease was mainly caused by a loss on cash due to the deconsolidation of ENI amounting to RMB2.56 million in the fiscal 2011, while there was no such loss for the same period of 2012.

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 [email protected].

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.

CONSOLIDATED BALANCE SHEETS











 

As of June 30,


 

As of June 30,


 

As of June 30,


2011


2012


2012

ASSETS

RMB


RMB


U.S. Dollars

Current assets









Cash and cash equivalents

RMB

3,485,944


RMB

3,533,283


$

559,090

Notes receivable


1,276,574



-



-

Trade accounts receivable, net


22,329,705



61,993,942



9,809,634

Trade accounts receivable- related parties, net


25,983,172



20,394,749



3,227,170

Inventories, net


22,576,094



24,281,300



3,842,160

Other receivables, net


6,128,794



8,074,096



1,277,608

Other receivables- related parties


4,383,000



17,729



2,805

Purchase advances, net


12,152,896



16,250,616



2,571,422

Purchase advances- related parties


989,828



1,093,534



173,036

Tax recoverable


-



2,790,722



441,591

Prepaid expenses


1,016,299



535,336



84,709

Deferred tax asset


458,133



1,106,801



175,135

Total current assets


100,780,439



140,072,108



22,164,360










Property and equipment, net


1,132,425



1,774,820



280,839

Long-term other receivable


12,971,481



10,302,349



1,630,196

Total Assets

RMB

114,884,345


RMB

152,149,277


$

24,075,395










LIABILITIES AND EQUITY









Current liabilities









Short-term bank loan

RMB

5,000,000


RMB

23,000,000


$

3,639,413

Trade accounts payable


6,320,488



11,905,560



1,883,881

Trade accounts payable- related parties


-



5,339,231



844,855

Other payables


1,960,924



2,341,826



370,560

Other payable- related parties


61,477



1,099,259



173,942

Deferred revenue


2,420,497



3,291,073



520,764

Advances from customers


782,945



936,124



148,128

Accrued payroll and employees' welfare


157,824



949,579



150,257

Accrued expenses


345,015



476,416



75,384

Taxes payable


7,192,123



9,681,620



1,531,975

Short-term borrowings


1,743,286



2,767,066



437,848

Short-term borrowings- related parties


911,399



4,123,306



652,453

Total current liabilities


26,895,978



65,911,060



10,429,460

Total Liabilities


26,895,978



65,911,060



10,429,460










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, 2011 and 2012)


529,979



529,979



83,861

Additional paid-in capital


65,877,686



67,643,791



10,703,640

Appropriated retained earnings


2,058,429



2,378,961



376,436

Unappropriated retained earnings


13,495,199



9,354,535



1,480,218

Accumulated other comprehensive loss


(288,897)



(290,496)



(45,967)

Total controlling shareholders' equity


81,672,396



79,616,770



12,598,188

Non-controlling interest


6,315,971



6,621,447



1,047,747

Total equity


87,988,367



86,238,217



13,645,935

Total Liabilities and Equity

RMB

114,884,345


RMB

152,149,277


$

24,075,395










 

RECON TECHNOLOGY, LTD.










CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME













For the year ended June 30,




2011



2012


2012




RMB



RMB


U.S. Dollars












Revenues










Hardware

RMB

41,677,918


RMB

49,693,929


$

7,863,337


Service


-



13,985,465



2,212,995


Software


2,111,111



3,952,991



625,503


Hardware - related parties


19,899,438



7,909,994



1,251,641


Total revenues


63,688,467



75,542,379



11,953,476












Cost of revenues


43,469,506



51,269,950



8,112,719


Gross margin


20,218,961



24,272,429



3,840,757






















Selling and distribution expenses


7,736,091



5,054,219



799,756


General and administrative expenses


32,055,652



22,755,891



3,600,787


Operating expenses


39,791,743



27,810,110



4,400,543






















Loss from operations


(19,572,782)



(3,537,681)



(559,786)












Other income (expenses)










Subsidy income


822,545



554,856



87,798


Interest income


1,463



335,517



53,091


Interest expense


(600,500)



(962,824)



(152,353)


Gain or loss from currency exchange


35,846



(46,303)



(7,327)


Other income (expense)


279,664



(78,097)



(12,358)


Loss on deconsolidation


(8,989,614)



-



-


Loss before income taxes


(28,023,378)



(3,734,532)



(590,935)


Benefit (provision) for income taxes


(665,146)



220,050



34,820


Net loss


(28,688,524)



(3,514,482)



(556,115)


Less: Net income attributable to non-controlling interest


347,851



305,653



48,365


Net loss attributable to Recon Technology, Ltd

RMB

(29,036,375)


RMB

(3,820,135)


$

(604,480)


Comprehensive Loss










Net loss


(28,688,524)



(3,514,482)



(556,115)


Foreign currency translation adjustment


(211,900)



(1,599)



(253)


Comprehensive loss


(28,900,424)



(3,516,081)



(556,368)


Comprehensive income attributable to non-controlling interest


324,307



305,830



48,393


Comprehensive loss attributable to Recon Technology, Ltd

RMB

(29,224,731)


RMB

(3,821,911)


$

(604,761)












Loss per common share - basic and diluted

RMB

(7.35)


RMB

(0.97)


$

(0.15)












Weighted - average shares -basic and diluted


3,951,811



3,951,811



3,951,811


 

RECON TECHNOLOGY, LTD.









CONSOLIDATED STATEMENTS OF CASH FLOWS

















For the year ended June 30,


2011


2012


2012


RMB


RMB


U.S. Dollars










Cash flows from operating activities:









Net loss

RMB

(28,688,524)


RMB

(3,514,482)


$

(556,115)

Adjustments to reconcile net loss to net cash used in operating activities:




Loss on deconsolidation


8,989,614



-



-

Depreciation


361,837



197,873



31,310

Provision for doubtful accounts





3,919,052



620,133

Stock based payments


1,420,588



1,239,788



196,178

Deferred tax benefit


(182,173)



(648,668)



(102,642)

Changes in operating assets and liabilities:









Trade accounts receivable


7,406,206



(42,916,527)



(6,790,912)

Trade accounts receivable-related parties


9,947,112



5,588,423



884,286

Notes receivbale


(1,276,574)



1,276,574



201,999

Other receivable, net


3,987,998



447,706



70,843

Other receivables related parties, net


(1,226,488)



4,365,271



690,740

Purchase advance, net


18,150,896



(4,488,357)



(710,217)

Purchase advance-related party, net


8,947,200



(103,706)



(16,410)

Tax recorvable


-



(2,790,722)



(441,591)

Prepaid expense


(269,661)



480,963



76,105

Inventories


(23,287,337)



(1,705,206)



(269,824)

Trade accounts payable


(4,747,743)



5,585,072



883,756

Trade accounts payable-related parties


-



5,339,231



844,855

Other payables


(1,183,142)



380,902



60,272

Other payables-related parties


133,206



1,037,782



164,214

Deferred income


(1,795,986)



870,576



137,756

Advances from customers


334,678



153,179



24,238

Accrued payroll and employees' welfare


(176,235)



791,755



125,284

Accrued expenses


54,212



131,401



20,792

Taxes payable


(3,231,315)



2,489,497



393,926

Net cash used in operating activities


(6,331,632)



(21,872,623)



(3,461,024)










Cash flows from investing activities:









Purchase of property and equipment


(173,089)



(840,268)



(132,960)

Cash effect of deconsolidating VIE


(2,256,305)



-



-

Net cash used in investing activities


(2,429,394)



(840,268)



(132,960)










Cash flows from financing activities:









Proceeds from short-term bank loan


5,000,000



23,000,000



3,639,413

Repayments of short-term bank loan


-



(5,000,000)



(791,177)

Proceeds from other receivables-loans


3,216,000







Proceeds from short-term borrowings


168,317



2,153,780



340,804

Proceeds from short-term borrowings-related party





4,991,907



789,896

Repayments of  short-term borrowings


(5,343,082)



(1,130,000)



(178,806)

Repayments of short-term borrowings-related party


(2,700,000)



(1,780,000)



(281,659)

Capital contribution in VIE


-



500,000



79,118

Net cash provided by financing activities


341,235



22,735,687



3,597,589










Effect of exchange rate fluctuation on cash and cash equivalents


(237,222)



24,543



3,884










Net increase (decrease) in cash and cash equivalent


(8,657,013)



47,340



7,490

Cash and cash equivalents at beginning of year


12,142,957



3,485,944



551,600

Cash and cash equivalents at end of year

RMB

3,485,944


RMB

3,533,284


$

559,090



















Supplemental cash flow information









Cash paid during the year for interest

RMB

401,529


RMB

442,719


$

70,054

Cash paid during the year for taxes

RMB

3,700,671


RMB

494,087


$

78,182










 

SOURCE Recon Technology, Ltd.


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