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Recon Technology Reports Strong Gains in FY 2014 and Announces Growth Goals
FY 2014 Results Were Boosted By Sharp Increases in Oilfield Automation and Furnaces Revenues, Improved Gross Margins, and an Operating Profit Versus Operating Loss in the Prior Year
PR Newswire
BEIJING

BEIJING, Sept. 29, 2014 /PRNewswire/ -- Recon Technology, Ltd. (NASDAQ: RCON), ("Recon" or the "Company"), a leading independent oilfield services provider operating primarily in China, today reported that in its fiscal year ended June 30, 2014, the Company was able to record the following results:

    --  Revenues grew 22% to $15,181,815 from $12,442,444* in FY 2013 as sales
        of oilfield hardware products to non-related parties more than doubled
    --  Adjusted net income attributable to Recon (non- U.S. GAAP)** grew 170%
        to approximately $831,550 from $307,440 in FY 2013
    --  Adjusted EBIDTA (non- U.S. GAAP) increased 88% year over year to
        $1,435,679, from $763,800*
    --  Net income attributable to Recon (U.S. GAAP) rose to approximately
        $131,140 from approximately $6,450* in the prior year
    --  Diluted EPS (U.S. GAAP) rose 1,400% to $0.03 from EPS of $0.002 in FY
        2013
    --  Adjusted diluted EPS** (non- U.S. GAAP) rose 137% to $0.19 compared with
        $0.08 a year earlier

* Based on the exchange rate of RMB6.1552 to US$1.00.

** Non- U.S. GAAP measures are explained in tables 3 and 4 below. Non -U.S. GAAP adjusted net income and EPS exclude certain special non-cash after tax expenses totaling $ 700,419 ($0.16 per share) that are included in net income

Other FY 2014 Highlights

    --  Hardware and Software sales to non-related parties grew 108.2% year over
        year, offsetting a decline in revenues related to fracturing
    --  Gross margins increased year-over-year from 32.7% to 34.7%, in part
        reflecting the decline in lower margin fracturing related sales
    --  Operating income increased from a loss in FY2013 of $91,751 to income of
        $459,813
    --  Current assets as of June 30, 2014, including approximately $2.94
        million in cash and cash equivalents, were approximately $25.1 million.
    --  The Company reported no long term debt and total current liabilities of
        approximately $8.18 million as of June 30, 2014
    --  Working capital as of June 30, 2014 was approximately $13.5 million
    --  There were approximately 4.4 million weighted average outstanding
        ordinary shares, on a fully diluted basis, as of June 30, 2014, up from
        approximately 4.0 million as of June 30, FY 2013, in part reflecting a
        registered direct offering in November 2013 of 546,500 ordinary shares
        and warrants to initially purchase an aggregate of 163,950 ordinary
        shares.  This offering generated net proceeds of approximately $2.0
        million.

Continuing Strong Outlook

Commenting on results, Mr. Shenping Yin, Chairman and CEO of Recon stated, "FY 2014 delivered a number of favorable highlights on both the top and bottom line despite reduced drilling activity and fallout from burgeoning reforms of China's oil industry. Our strong hardware sales, reflecting growing acceptance by customers of our deep understanding of their needs and the excellent technology and know-how we can provide to improve their production efficiency, safety and profits, was certainly a key highlight as was the swing into the black of results from operations. While we didn't generate significant revenues from our fracturing services this past year, we are optimistic we will see these grow in the future based on our ongoing fracturing projects, which are located at not only Zhongyuan Oilfield, but also Northeast Oilfield and Sichuan Province."

Promising Year Again For Furnaces and Burners

"As new wells are developed," Mr. Yin continued, "we believe we will see continued strong growth this year in sales of our burners and furnaces. Another promising growth area is in down-hole tools, and we now have good experience with this technology and have seen strong opportunities. We also see a continuing focus on developing new sources of energy in China. Natural gas obtained through fracturing will certainly be part of this trend and as I've noted, we anticipate a pick up in our activity in the fracturing business in FY 2014."

"Not least of all," Mr. Yin added, "we are cognizant of the need to further improve our profits and believe that further integration into our offerings of our higher margin services will be one key to accomplishing this, as well as growing our business to include some down-hole services to add to the up-ground business we have concentrated on to date."

Growth in Automation Products

Mr. Yin continued, "In FY 2014, we see particularly good continuing demand for 'Digital Oil Field' automation products and services, further enhanced by our recent appointment as an authorized third party system integrator for world renowned automation leader ABB. While I believe this partnership, as well as our partnerships with global oil servicing leaders such as Baker Hughes, Emerson and others reflects well on our abilities, more importantly, it inspires further confidence in our customers and helps to expand the range of products and services we are able to customize for the unique needs of the oil and gas fields in China."

Growth Goals: Organic Growth Plus Acquisitions

"In recent weeks," Mr. Yin said, "we have focused on developing growth goals to guide the efforts of our still young Company that we believe is entering a new stage of development. Our major focus going forward will continue to be on the organic development of our business, built on strong technology, our very well developed solid relationships with China's large oil companies, and our focus on building our business in China's most challenging oil fields away from large potential competitors. However, we believe we can supplement this growth with carefully chosen acquisitions and joint ventures, and have put a greater effort into accomplishing this."

Double Our Revenues Over Next 2 to 3 Years

"Looking ahead," Mr. Yin said, "we believe that an achievable goal for Recon is annual average revenue growth of a minimum of 20%. We further believe that if we couple this with appropriate acquisitions, we can aim to double our revenues over the next two to three fiscal years."

Mr. Yin concluded, "While pursuing these goals, we will keep in mind the best interests of our shareholders, who we know would also like to see a growing bottom line as we grow our revenues, and also don't want us to stray from our areas of expertise. We think we have a very exciting future ahead and look forward to continuing to inform shareholders of our progress."

Please See Attached Tables

Recon Technology, Ltd. is China's first independent oil and gas field service company listed on NASDAQ (RCON). Closely working with leading global partners, Recon has achieved rapid growth supplying China's largest oil and gas exploration companies, including Sinopec and China National Petroleum Corporation, with advanced automated technologies, efficient gathering and transportation equipment and reservoir stimulation measures. The solutions Recon provides are aimed at increasing gas and petroleum extraction levels, reducing impurities improving safety and lowering production costs. For additional information, please visit www.recon.cn.

Cautionary Statements

Statements made in this release with respect to Recon's current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of Recon. Forward-looking statements include, but are not limited to, those statements using words such as "believe," "expect," "plans," "strategy," "prospects," "forecast," "estimate," "project," "anticipate," "aim," "intend," "seek," "may," "might," "could" or "should," and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on management's assumptions, judgments and beliefs in light of the information currently available to it. Recon cautions investors that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, 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. Therefore investors should not place undue reliance on such forward-looking statements. Actual results may differ significantly from those set forth in the forward-looking statements.

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 Relations Contacts:

China

Liu Jia
Chief Financial Officer
Recon Technology, Ltd.
info@recon.cn
+86 (10) 84945799

U.S.

Ken Donenfeld
DGI Investor Relations
kdonenfeld@dgiir.com 1-212-425-5700

Recon Technology Financial Tables

Table 1: Gross Profit and Gross Profit Margin


                        FY 2013         FY 2014          % Change
                        -------         -------          --------

    Revenues ('000 USD)         $12,442          $15,182             22%

    Cost of revenues             $8,372           $9,915          18.40%
                                 ------           ------

    Gross profit                 $4,070           $5,267          29.40%
                                 ======           ======

    GP Margin (%)               32.70%          34.70%             2%

Table 2: Operating Expense and Operating Income


    Unit: '000 USD        FY 2013         FY 2014         % Change

    Selling and
     distribution
     expenses                         995             860          (13.6)%

    % of revenue                    8.00%          5.70%               -

    General and
     administrative
     expenses                       1,784           2,632           +47.6%

    % of revenue                   14.30%         17.30%               -

    Research and
     development expenses           1,383           1,315           (4.9)%

    % of revenue                   11.10%          8.70%               -
                                    -----

    Operating expenses             $4,162          $4,806           +15.5%
                                   ------

    Operating
     income(loss)                 -91,751         459,812          +601.2%
                                  -------         -------

Table 3:

Adjusted EBITDA

Adjusted EBITDA. We define adjusted EBITDA as net income (loss) adjusted for income tax expense, interest expense, loss from investment, non-cash stock compensation expense, depreciation and amortization. We think it is useful to an equity investor in evaluating our operating performance because: (1) it is widely used by investors in our industry to measure a company's operating performance without regard to items such as interest expense, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which the assets were acquired; and (2) it helps investors more meaningfully evaluate and compare the results of our operations from period to period by removing the impact of our capital structure and asset base from our operating results.


                                                           FY2013           FY2014      FY2014            Percentage

                                                             RMB             RMB         USD                Change
                                                             ---             ---         ---                ------

    Reconciliation of Adjusted EBITDA

    to Net Income

         Net income                                       YEN       619,541        YEN          1,827,820              $296,956  195.0%

         Provision for income tax                                   286,871                       961,136               156,150  235.0%

         Interest expense and foreign currency adjustment         1,323,726                     1,141,069               185,383 (13.8)%

         Change in fair value of warrants liability                       -                     (60,647)              (9,853)   100%

         Loss from investment                                             -                    1,535,250               249,423    100%

         Restricted shares issued for consulting services                 -                      407,593                66,219    100%

         Share-based compensation expense                         1,852,656                     2,429,028               394,630   31.1%

         Depreciation and amortization                              618,552                       595,647                96,771  (3.7)%
                                                                    -------                       -------                ------

    Adjusted EBITDA                                       YEN     4,701,346         YEN         8,836,896            $1,435,679   88.0%
                                                          ===     =========        ===          =========            ==========

Table 4:

Adjusted Net Income (Loss) and Adjusted Earnings (Loss) Per Share


                                                                                    For the Years Ended

                                                                                         June 30,
                                                                                         --------

                                                                      2013                     2014                    2014

                                                                    RMB                     RMB                   USD
                                                                    ---                     ---                   ---

    Reconciliation of Net Income

    to Adjusted Net Income attributable to Recon Technology, Ltd

         Net income attributable to Recon Technology, Ltd        YEN            39,698                YEN          807,188              $131,140

    Special items?

         Change in fair value of warrants liability                      -                            (60,647)              (9,853)

         Loss from investment                                            -                           1,535,250               249,423

         Restricted shares issued for consulting services                -                             407,593                66,219

         Share-based compensation expense                                  1,852,656                           2,429,028               394,630

    Adjusted net income attributable to Recon Technology, Ltd    YEN         1,892,354                 YEN       5,118,412              $831,559
                                                                 ===         =========                ===        =========              ========


    Reconciliation of U.S. GAAP Earnings Per Share

    to Non U.S. GAAP Adjusted Earnings Per Share - diluted

    U.S. GAAP earnings per share - diluted                       YEN              0.01                YEN             0.18                 $0.03
                                                                 ===              ====                ===             ====                 =====

      Impact of special items on earnings per share                             0.47                                0.99                  0.16

    Non U.S. GAAP adjusted earnings per share -  diluted         YEN              0.48                YEN             1.17                 $0.19
                                                                 ===              ====                ===             ====                 =====

    Weighted - average shares -diluted                                     3,951,811                           4,368,162             4,368,162
                                                                           =========                           =========             =========

Special items are certain non-cash expenses that are included in our U.S. GAAP reported results. There was no income tax benefit associated with the special items. The non-GAAP financial measures are provided to enhance investors' overall understanding of Recon's current financial performance. These non-GAAP measures are not intended to replace the presentation of the Company's financial results in accordance with GAAP. Use of the terms non-GAAP adjusted EPS may differ from similar measures reported by other companies. All of the non-GAAP measures discussed above are reconciled from their respective GAAP measures in the "Reconciliation of U.S. GAAP Earnings Per Share to Non U.S. GAAP Adjusted Earnings Per Share - diluted" table set forth above. We define adjusted EBITDA as net income (loss) adjusted for income tax expense, interest expense, loss from investment, non-cash stock compensation expense, depreciation and amortization. We define non GAAP EPS as adjusted net income divided by the total outstanding shares, on a fully-diluted basis. We define non-GAAP EPS as non-GAAP net income divided by the weighted average outstanding shares, on a fully-diluted basis.

FOR ADDITIONAL INFORMATION WE URGE YOU TO PLEASE CAREFULLY STUDY THE COMPANY'S ANNUAL REPORT ON FORM 10-K FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 29, 2014


                                                                                              RECON TECHNOLOGY, LTD

                                                                                           CONSOLIDATED BALANCE SHEETS


                                                                                                              As of June 30,                        As of June 30,                              As of June 30,
                                                                                                              --------------                        --------------                              --------------

                                                                                                                        2013                                 2014                          2014
                                                                                                                        ----                                 ----                          ----

    ASSETS                                                                                                          RMB                             RMB                          U.S. Dollars
                                                                                                                    ---                             ---                          ------------

    Current assets

    Cash and cash equivalents                                                                                       YEN             12,350,392             YEN         18,094,586                                 $2,939,723

    Notes receivable                                                                                               2,578,855                                      -                                           -

    Trade accounts receivable, net                                                                                                38,648,780                         43,553,737                                  7,075,926

    Trade accounts receivable- related parties, net                                                                               18,744,364                          7,479,298                                  1,215,119

    Inventories, net                                                                                                              13,271,070                         14,336,602                                  2,329,185

    Other receivables, net                                                                                                        19,131,503                         18,293,043                                  2,971,966

    Other receivables- related parties                                                                                               742,528                          1,414,433                                    229,795

    Purchase advances, net                                                                                                        18,412,507                         25,759,065                                  4,184,927

    Purchase advances- related parties                                                                                               394,034                            394,034                                     64,016

    Tax recoverable                                                                                                  575,650                                      -                                           -

    Prepaid expenses                                                                                                               2,487,956                          2,634,664                                    428,039

    Prepaid expenses - related parties                                                                                               366,000                            230,000                                     37,367

    Deferred tax asset                                                                                                             1,006,721                          1,209,961                                    196,575
                                                                                                                                   ---------                          ---------                                    -------

    Total current assets                                                                                                         128,710,360                        133,399,423                                 21,672,638


    Property and equipment, net                                                                                                    1,709,846                          1,321,538                                    214,703

    Long-term trade accounts receivable, net                                                                               -                            14,456,317                                    2,348,635

    Long-term investment                                                                                           1,549,450                                      -                                           -

    Long-term other receivable                                                                                                     3,502,680                          5,353,104                                    869,688
                                                                                                                                   ---------                          ---------                                    -------

    Total Assets                                                                                                    YEN            135,472,336             YEN        154,530,382                                $25,105,664
                                                                                                                    ===            ===========             ===        ===========                                ===========


    LIABILITIES AND EQUITY

    Current liabilities

    Short-term bank loans                                                                                           YEN             10,000,000             YEN         10,000,000                                 $1,624,643

    Trade accounts payable                                                                                                         7,384,165                         11,413,505                                  1,854,287

    Trade accounts payable- related parties                                                                        3,994,718                                      -                                           -

    Other payables                                                                                                                 1,964,691                          1,765,079                                    286,762

    Other payable- related parties                                                                                                 4,239,675                          3,306,024                                    537,111

    Deferred revenue                                                                                                               3,381,382                          4,419,824                                    718,063

    Advances from customers                                                                                                          470,700                            801,385                                    130,196

    Accrued payroll and employees' welfare                                                                                         1,992,783                            417,624                                     67,849

    Accrued expenses                                                                                                                 488,730                            203,051                                     32,989

    Income before income tax                                                                                                       6,754,428                          7,589,846                                  1,233,079

    Short-term borrowings- related parties                                                                                         5,503,279                          5,207,728                                    846,070

    Net Income                                                                                                       570,375                                      -                                           -

    Deferred tax liability                                                                                                 -                               180,186                                       29,274

    Warrants liability                                                                                                     -                             5,021,621                                      815,834

    Total current liabilities                                                                                                     46,744,926                         50,325,873                                  8,176,157
                                                                                                                                  ----------                         ----------                                  ---------


    Comprehensive income


    Comprehensive income attributable to Recon
    Technology, Ltd

    Common stock, ($ 0.0185 U.S. dollar par value, 25,000,000 shares authorized; 3,951,811 and
     4,717,336 shares issued and outstanding as of June 30, 2013 and June 30, 2014, respectively)                                    529,979                            616,865                                    100,217

    Earnings per common share - basic                                                                                             69,516,447                         83,061,058                                 13,494,453

    Earnings per common share - diluted                                                                                            3,023,231                          4,148,929                                    674,053

    Unappropriated retained earnings                                                                                               8,749,963                          8,431,453                                  1,369,810

    Accumulated other comprehensive loss                                                                                           (293,201)                         (279,275)                                  (45,374)

    Total shareholders' equity                                                                                                    81,526,419                         95,979,030                                 15,593,159

    Non-controlling interest                                                                                                       7,200,991                          8,225,479                                  1,336,348
                                                                                                                                   ---------                          ---------                                  ---------

    Total equity                                                                                                                  88,727,410                        104,204,509                                 16,929,507
                                                                                                                                  ----------                        -----------                                 ----------

    Total Liabilities and Equity                                                                                    YEN            135,472,336             YEN        154,530,382                                $25,105,664
                                                                                                                    ===            ===========             ===        ===========                                ===========


                                                             The accompanying notes are an integral part of these consolidated financial statements


                                                             RECON TECHNOLOGY, LTD
                                        CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

                                                                        For the years ended

                                                                              June 30,
                                                                              --------

                                                                       2013                                        2014            2014
                                                                       ----                                        ----            ----

                                                   RMB                                       RMB                        USD
                                                   ---                                       ---                        ---


    Revenues

    Hardware and software                          YEN          41,408,517                    YEN           86,229,283                    $14,009,176

    Service                                                   25,464,003                                     477,778                         77,622

    Hardware and software -related
     parties                                                   9,713,209                                   6,740,047                      1,095,017
                                                               ---------                                   ---------                      ---------

    Total revenues                                            76,585,729                                  93,447,108                     15,181,815
                                                              ----------                                  ----------                     ----------


    Cost of revenues

    Hardware and software                          YEN          26,617,786                    YEN           57,333,670                     $9,314,672

    Service                                                   18,567,123                                      77,107                         12,527

    Hardware and software -related
     parties                                                   6,346,850                                   3,619,470                        588,035
                                                               ---------                                   ---------                        -------

    Total cost of revenues                                    51,531,759                                  61,030,247                      9,915,234

    Gross profit                                              25,053,970                                  32,416,861                      5,266,581
                                                              ----------                                  ----------                      ---------



    Selling and distribution expenses                          6,126,095                                   5,293,343                        859,979

    General and administrative expenses                       10,978,942                                  16,198,947                      2,631,750

    Research and development expenses                          8,513,680                                   8,094,333                      1,315,040

    Operating expenses                                        25,618,717                                  29,586,623                      4,806,769
                                                              ----------                                  ----------                      ---------



    Income (loss) from operations                              (564,747)                                  2,830,238                        459,812
                                                                --------                                   ---------                        -------


    Other income (expenses)

    Subsidy income                                             2,257,344                                   1,250,509                        203,163

    Interest income                                              570,442                                     384,182                         62,416

    Interest expense                                         (1,557,204)                                  (952,574)                     (154,759)

    Loss from investment                                -                                (1,535,250)                        (249,423)

    Change in fair value of warrants
     liability                                          -                                     60,647                            9,853

    Gain?loss?from foreign currency
     exchange                                                    233,478                                   (188,495)                      (30,624)

    Other income (expense)                                      (32,901)                                    939,699                        152,668
                                                                 -------                                     -------                        -------


    Income before income tax                                     906,412                                   2,788,956                        453,106

    Provision for income tax                                     286,871                                     961,136                        156,150
                                                                                                                                          -------

    Net Income                                                   619,541                                   1,827,820                        296,956


    Less: Net income attributable to
     non-controlling interest                                    579,843                                   1,020,632                        165,816

    Net Income attributable
     to Recon Technology, Ltd                      YEN              39,698                     YEN             807,188                       $131,140
                                                   ===              ======                    ===              =======                       ========


    Comprehensive income

    Net income                                                   619,541                                   1,827,820                        296,956

    Foreign currency translation
     adjustment                                                  (3,004)                                     17,783                          2,889
                                                                  ------                                      ------                          -----

    Comprehensive income                                         616,537                                   1,845,603                        299,845

    Less: Comprehensive income
     attributable to non-controlling
     interest                                                    579,543                                   1,022,410                        166,105
                                                                 -------                                   ---------                        -------

    Comprehensive income
     attributable to Recon
     Technology, Ltd                               YEN              36,994                     YEN             823,193                       $133,740
                                                   ===              ======                    ===              =======                       ========


    Earnings per common share
     -basic                                        YEN                0.01                    YEN                 0.19                          $0.03
                                                   ===                ====                    ===                 ====                          =====

    Earnings per common share
     -diluted                                      YEN                0.01                    YEN                 0.18                          $0.03
                                                   ===                ====                    ===                 ====                          =====

    Weighted - average shares -basic                           3,951,811                                   4,303,955                      4,303,955
                                                               =========                                   =========                      =========

    Weighted - average shares -diluted                         3,951,811                                   4,368,162                      4,368,162
                                                               =========                                   =========                      =========


                        The accompanying notes are an integral part of these consolidated financial statements


                                                         RECON TECHNOLOGY, LTD

                                                 CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                              For the years ended June 30,
                                                              ----------------------------

                                                  2013                           2014                           2014
                                                  ----                           ----                           ----

                                               RMB                            RMB                    U.S. Dollars
                                               ---                            ---                    ------------


    Cash flows from operating
     activities:

    Net income                                 YEN               619,541                   YEN            1,827,820                   $296,956

    Adjustments to reconcile net
     income to net cash provided
     by (used in) operating
     activities:

    Depreciation                                               618,552                                    595,647                     96,771

    Loss from disposal of
     equipment                                                  38,006                                    128,902                     20,942

    Provision/(recovery of) for
     doubtful accounts                                       (749,121)                                 1,518,778                    246,747

    Share based compensation                                 1,852,656                                  2,429,028                    394,630

    Loss from investment                             -                                  1,535,250                      249,423

    Deferred tax provision/
     (benefit)                                                 100,080                                   (23,054)                   (3,745)

    Change in fair value of
     warrants liability                              -                                   (60,647)                     (9,853)

    Restricted shares issued for
     services                                        -                                    407,593                       66,219

    Changes in operating assets
     and liabilities:

    Notes receivable                                       (2,578,855)                                 2,578,855                    418,972

    Trade accounts receivable                               25,107,519                                (5,291,233)                 (859,636)

    Trade accounts receivable-
     related parties                                           672,175                                (3,819,299)                 (620,500)

    Inventories                                             11,010,230                                (1,065,532)                 (173,111)

    Other receivable, net                                  (4,263,858)                                 (981,099)                 (159,395)

    Other receivables related
     parties, net                                            (724,799)                                 (671,905)                 (109,161)

    Purchase advance, net                                  (2,190,796)                               (6,879,156)               (1,117,617)

    Purchase advance-related
     party, net                                699,500                                           -                           -

    Tax recoverable                                          2,215,072                                    575,650                     93,523

    Prepaid expense                                        (1,952,620)                                 (146,708)                  (23,835)

    Prepaid expense -related
     party, net                                              (366,000)                                   136,000                     22,095

    Trade accounts payable                                 (4,521,395)                                 4,029,340                    654,624

    Trade accounts payable-
     related parties                                       (1,344,513)                               (3,994,718)                 (648,999)

    Other payables                                           (377,135)                                 (199,612)                  (32,430)

    Other payables-related parties                           3,140,416                                  (933,651)                 (151,685)

    Deferred income                                             90,309                                  1,038,442                    168,710

    Advances from customers                                  (465,424)                                   330,685                     53,724

    Accrued payroll and employees'
     welfare                                                 1,043,204                                (1,575,159)                 (255,907)

    Accrued expenses                                            12,314                                  (285,679)                  (46,413)

    Taxes payable                                          (2,927,192)                                   835,418                    135,726

    Net cash provided by (used in)
     operating activities                                   24,757,866                                (7,960,044)               (1,293,225)
                                                            ----------                                 ----------                 ----------


    Cash flows from investing
     activities:

    Purchase of property and
     equipment                                               (753,583)                                 (477,957)                  (77,651)

    Long-term investment                   (1,549,450)                                           -                           -

    Proceeds from disposal of
     equipment                                                 162,000                                    141,716                     23,024

    Net cash used in investing
     activities                                            (2,141,033)                                 (336,241)                  (54,627)
                                                            ----------                                   --------                    -------


    Cash flows from financing
     activities:

    Proceeds from short-term bank
     loans                                                  10,000,000                                 23,500,000                  3,817,910

    Repayments of short-term bank
     loans                                                (23,000,000)                              (23,500,000)               (3,817,910)

    Proceeds from short-term
     borrowings                                579,073                                           -                           -

    Proceeds from borrowings-
     related parties                                         1,962,450                                  5,007,728                    813,577

    Repayment of  short-term
     borrowings                                            (2,775,764)                                 (570,375)                  (92,666)

    Repayment of short-term
     borrowings-related parties                              (582,477)                               (5,303,279)                 (861,594)

    Proceeds from sale of common
     stock, net of issuance costs                    -                                 12,132,882                    1,971,160

    Proceeds from stock options
     exercised                                       -                                  2,704,909                      439,451

    Capital contribution in VIE                 20,000                                           -                           -

    Net cash provided by (used in)
     financing activities                                 (13,796,718)                                13,971,865                  2,269,928
                                                           -----------                                 ----------                  ---------


    Effect of exchange rate
     fluctuation on cash and cash
     equivalents                                               (3,006)                                    68,614                     11,150
                                                                ------                                     ------                     ------


    Net increase (decrease) in
     cash and cash equivalents                               8,817,109                                  5,744,194                    933,226

    Cash and cash equivalents at
     beginning of period                                     3,533,283                                 12,350,392                  2,006,497
                                                             ---------                                 ----------                  ---------

    Cash and cash
     equivalents at end
     of period                                 YEN            12,350,392                   YEN           18,094,586                 $2,939,723
                                               ===            ==========                   ===           ==========                 ==========

                                                                                                -                           -


    Supplemental cash flow
     information

    Cash paid during the
     period for interest                       YEN             1,356,581                   YEN              939,416                   $152,622
                                               ===             =========                   ===              =======                   ========

    Cash paid during the
     period for taxes                          YEN               832,028                   YEN              704,982                   $114,534
                                               ===               =======                   ===              =======                   ========


    Non-cash investing and
     financing activities

    Issurance of common
     stock to prepay
     professional
     services                                  YEN                     -                  YEN            1,002,721                   $165,142
                                               ===                   ===                  ===            =========                   ========


                     The accompanying notes are an integral part of these consolidated financial statements

SOURCE Recon Technology, Ltd.

SOURCE: Recon Technology, Ltd.

Recon Technology Reports Strong Gains in FY 2014 and Announces Growth Goals

FY 2014 Results Were Boosted By Sharp Increases in Oilfield Automation and Furnaces Revenues, Improved Gross Margins, and an Operating Profit Versus Operating Loss in the Prior Year

PR Newswire

BEIJING, Sept. 29, 2014 /PRNewswire/ -- Recon Technology, Ltd. (NASDAQ: RCON), ("Recon" or the "Company"), a leading independent oilfield services provider operating primarily in China, today reported that in its fiscal year ended June 30, 2014, the Company was able to record the following results:

  • Revenues grew 22% to $15,181,815 from $12,442,444* in FY 2013 as sales of oilfield hardware products to non-related parties more than doubled
  • Adjusted net income attributable to Recon (non- U.S. GAAP)** grew 170% to approximately $831,550 from $307,440 in FY 2013
  • Adjusted EBIDTA (non- U.S. GAAP) increased 88% year over year to $1,435,679, from $763,800*
  • Net income attributable to Recon (U.S. GAAP) rose to approximately $131,140 from approximately $6,450* in the prior year
  • Diluted EPS (U.S. GAAP) rose 1,400% to $0.03 from EPS of $0.002 in FY 2013
  • Adjusted diluted EPS** (non- U.S. GAAP) rose 137% to $0.19 compared with $0.08 a year earlier

* Based on the exchange rate of RMB6.1552 to US$1.00.

** Non- U.S. GAAP measures are explained in tables 3 and 4 below.  Non -U.S. GAAP adjusted net income and EPS exclude certain special non-cash after tax expenses totaling $ 700,419 ($0.16 per share) that are included in net income

Other FY 2014 Highlights

  • Hardware and Software sales to non-related parties grew 108.2% year over year, offsetting a decline in revenues related to fracturing
  • Gross margins increased year-over-year from 32.7% to 34.7%, in part reflecting the decline in lower margin fracturing related sales
  • Operating income increased from a loss in FY2013 of $91,751 to income of $459,813
  • Current assets as of June 30, 2014, including approximately $2.94 million in cash and cash equivalents, were approximately $25.1 million.
  • The Company reported no long term debt and total current liabilities of approximately $8.18 million as of June 30, 2014
  • Working capital as of June 30, 2014 was approximately $13.5 million
  • There were approximately 4.4 million weighted average outstanding ordinary shares, on a fully diluted basis, as of June 30, 2014, up from approximately 4.0 million as of June 30, FY 2013, in part reflecting a registered direct offering in November 2013 of 546,500 ordinary shares and warrants to initially purchase an aggregate of 163,950 ordinary shares.  This offering generated net proceeds of approximately $2.0 million.

Continuing Strong Outlook

Commenting on results, Mr. Shenping Yin, Chairman and CEO of Recon stated, "FY 2014 delivered a number of favorable highlights on both the top and bottom line despite reduced drilling activity and fallout from burgeoning reforms of China's oil industry.  Our strong hardware sales, reflecting growing acceptance by customers of our deep understanding of their needs and the excellent technology and know-how we can provide to improve their production efficiency, safety and profits, was certainly a key highlight as was the swing into the black of results from operations.  While we didn't generate significant revenues from our fracturing services this past year, we are optimistic we will see these grow in the future based on our ongoing fracturing projects, which are located at not only Zhongyuan Oilfield, but also Northeast Oilfield and Sichuan Province."

Promising Year Again For Furnaces and Burners

"As new wells are developed," Mr. Yin continued, "we believe we will see continued strong growth this year in sales of our burners and furnaces.  Another promising growth area is in down-hole tools, and we now have good experience with this technology and have seen strong opportunities.  We also see a continuing focus on developing new sources of energy in China.  Natural gas obtained through fracturing will certainly be part of this trend and as I've noted, we anticipate a pick up in our activity in the fracturing business in FY 2014."

"Not least of all," Mr. Yin added, "we are cognizant of the need to further improve our profits and believe that further integration into our offerings of our higher margin services will be one key to accomplishing this, as well as growing our business to include some down-hole services to add to the up-ground business we have concentrated on to date."

Growth in Automation Products

Mr. Yin continued, "In FY 2014, we see particularly good continuing demand for 'Digital Oil Field' automation products and services, further enhanced by our recent appointment as an authorized third party system integrator for world renowned automation leader ABB. While I believe this partnership, as well as our partnerships with global oil servicing leaders such as Baker Hughes, Emerson and others reflects well on our abilities, more importantly, it inspires further confidence in our customers and helps to expand the range of products and services we are able to customize for the unique needs of the oil and gas fields in China."

Growth Goals: Organic Growth Plus Acquisitions

"In recent weeks," Mr. Yin said, "we have focused on developing growth goals to guide the efforts of our still young Company that we believe is entering a new stage of development.  Our major focus going forward will continue to be on the organic development of our business, built on strong technology, our very well developed solid relationships with China's large oil companies, and our focus on building our business in China's most challenging oil fields away from large potential competitors.  However, we believe we can supplement this growth with carefully chosen acquisitions and joint ventures, and have put a greater effort into accomplishing this."

Double Our Revenues Over Next 2 to 3 Years

"Looking ahead," Mr. Yin said, "we believe that an achievable goal for Recon is annual average revenue growth of a minimum of 20%.  We further believe that if we couple this with appropriate acquisitions, we can aim to double our revenues over the next two to three fiscal years."

Mr. Yin concluded, "While pursuing these goals, we will keep in mind the best interests of our shareholders, who we know would also like to see a growing bottom line as we grow our revenues, and also don't want us to stray from our areas of expertise.  We think we have a very exciting future ahead and look forward to continuing to inform shareholders of our progress."

Please See Attached Tables

Recon Technology, Ltd. is China's first independent oil and gas field service company listed on NASDAQ (RCON). Closely working with leading global partners, Recon has achieved rapid growth supplying China's largest oil and gas exploration companies, including Sinopec and China National Petroleum Corporation, with advanced automated technologies, efficient gathering and transportation equipment and reservoir stimulation measures. The solutions Recon provides are aimed at increasing gas and petroleum extraction levels, reducing impurities improving safety and lowering production costs. For additional information, please visit www.recon.cn.

Cautionary Statements

Statements made in this release with respect to Recon's current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of Recon. Forward-looking statements include, but are not limited to, those statements using words such as "believe," "expect," "plans," "strategy," "prospects," "forecast," "estimate," "project," "anticipate," "aim," "intend," "seek," "may," "might," "could" or "should," and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on management's assumptions, judgments and beliefs in light of the information currently available to it. Recon cautions investors that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, 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. Therefore investors should not place undue reliance on such forward-looking statements. Actual results may differ significantly from those set forth in the forward-looking statements. 

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 Relations Contacts:

China

Liu Jia 
Chief Financial Officer
Recon Technology, Ltd.
info@recon.cn
+86 (10) 84945799

U.S.

Ken Donenfeld
DGI Investor Relations
kdonenfeld@dgiir.com                                                                                                                                            1-212-425-5700

Recon Technology Financial Tables

Table 1: Gross Profit and Gross Profit Margin 



FY 2013


FY 2014


% Change

Revenues ('000 USD)


$12,442


$15,182


22%

Cost of revenues


$8,372


$9,915


18.40%

Gross profit


$4,070


$5,267


29.40%

GP Margin (%)


32.70%


34.70%


2%

Table 2: Operating Expense and Operating Income 

Unit: '000 USD

FY 2013


FY 2014


% Change

Selling and distribution expenses

995


860


(13.6)%

% of revenue

8.00%


5.70%


-

General and administrative expenses

1,784


2,632


+47.6%

% of revenue

14.30%


17.30%


-

Research and development expenses

1,383


1,315


(4.9)%

% of revenue

11.10%


8.70%


-

Operating expenses

$4,162


$4,806


+15.5%

Operating income(loss)

-91,751


459,812


+601.2%

Table 3:

Adjusted EBITDA

Adjusted EBITDA. We define adjusted EBITDA as net income (loss) adjusted for income tax expense, interest expense, loss from investment, non-cash stock compensation expense, depreciation and amortization. We think it is useful to an equity investor in evaluating our operating performance because: (1) it is widely used by investors in our industry to measure a company's operating performance without regard to items such as interest expense, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which the assets were acquired; and (2) it helps investors more meaningfully evaluate and compare the results of our operations from period to period by removing the impact of our capital structure and asset base from our operating results.


FY2013


FY2014


FY2014


Percentage


RMB


RMB


USD


Change

Reconciliation of Adjusted EBITDA













to Net Income













     Net income

¥

619,541


¥

1,827,820


$

296,956



195.0

%

     Provision for income tax


286,871



961,136



156,150



235.0

%

     Interest expense and foreign currency adjustment


1,323,726



1,141,069



185,383



(13.8)

%

     Change in fair value of warrants liability


-



(60,647)



(9,853)



100

%

     Loss from investment


-



1,535,250



249,423



100

%

     Restricted shares issued for consulting services


-



407,593



66,219



100

%

     Share-based compensation expense


1,852,656



2,429,028



394,630



31.1

%

     Depreciation and amortization


618,552



595,647



96,771



(3.7)

%

Adjusted EBITDA

¥

4,701,346


 ¥

8,836,896


$

1,435,679



88.0

%

Table 4:

Adjusted Net Income (Loss) and Adjusted Earnings (Loss) Per Share


For the Years Ended


June 30,


2013


2014


2014


RMB


RMB


USD

Reconciliation of Net Income









to Adjusted Net Income attributable to Recon Technology, Ltd









     Net income attributable to Recon Technology, Ltd

¥

39,698


¥

807,188


$

131,140

Special items;









     Change in fair value of warrants liability


-



(60,647)



(9,853)

     Loss from investment


-



1,535,250



249,423

     Restricted shares issued for consulting services


-



407,593



66,219

     Share-based compensation expense


1,852,656



2,429,028



394,630

Adjusted net income attributable to Recon Technology, Ltd

¥

1,892,354


 ¥

5,118,412


$

831,559










Reconciliation of U.S. GAAP Earnings Per Share









to Non U.S. GAAP Adjusted Earnings Per Share - diluted









U.S. GAAP earnings per share - diluted

¥

0.01


¥

0.18


$

0.03

  Impact of special items on earnings per share


0.47



0.99



0.16

Non U.S. GAAP adjusted earnings per share -  diluted

¥

0.48


¥

1.17


$

0.19

Weighted - average shares -diluted


3,951,811



4,368,162



4,368,162


Special items are certain non-cash expenses that are included in our U.S. GAAP reported results. There was no income tax benefit associated with the special items. The non-GAAP financial measures are provided to enhance investors' overall understanding of Recon's current financial performance. These non-GAAP measures are not intended to replace the presentation of the Company's financial results in accordance with GAAP. Use of the terms non-GAAP adjusted EPS may differ from similar measures reported by other companies. All of the non-GAAP measures discussed above are reconciled from their respective GAAP measures in the "Reconciliation of U.S. GAAP Earnings Per Share to Non U.S. GAAP Adjusted Earnings Per Share - diluted" table set forth above. We define adjusted EBITDA as net income (loss) adjusted for income tax expense, interest expense, loss from investment, non-cash stock compensation expense, depreciation and amortization. We define non GAAP EPS as adjusted net income divided by the total outstanding shares, on a fully-diluted basis. We define non-GAAP EPS as non-GAAP net income divided by the weighted average outstanding shares, on a fully-diluted basis.

FOR ADDITIONAL INFORMATION WE URGE YOU TO PLEASE CAREFULLY STUDY THE COMPANY'S ANNUAL REPORT ON FORM 10-K FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 29, 2014

RECON TECHNOLOGY, LTD

CONSOLIDATED BALANCE SHEETS












As of June 30,



As of June 30,



As of June 30,


2013


2014


2014

ASSETS

RMB


RMB


U.S. Dollars

Current assets









Cash and cash equivalents 

¥

12,350,392


¥

18,094,586


$

2,939,723

Notes receivable


2,578,855



-



-

Trade accounts receivable, net 


38,648,780



43,553,737



7,075,926

Trade accounts receivable- related parties, net


18,744,364



7,479,298



1,215,119

Inventories, net


13,271,070



14,336,602



2,329,185

Other receivables, net 


19,131,503



18,293,043



2,971,966

Other receivables- related parties


742,528



1,414,433



229,795

Purchase advances, net


18,412,507



25,759,065



4,184,927

Purchase advances- related parties


394,034



394,034



64,016

Tax recoverable


575,650



-



-

Prepaid expenses 


2,487,956



2,634,664



428,039

Prepaid expenses - related parties


366,000



230,000



37,367

Deferred tax asset


1,006,721



1,209,961



196,575

Total current assets


128,710,360



133,399,423



21,672,638










Property and equipment, net


1,709,846



1,321,538



214,703

Long-term trade accounts receivable, net


-



14,456,317



2,348,635

Long-term investment


1,549,450



-



-

Long-term other receivable


3,502,680



5,353,104



869,688

Total Assets

¥

135,472,336


¥

154,530,382


$

25,105,664










LIABILITIES AND EQUITY 









Current liabilities









Short-term bank loans

¥

10,000,000


¥

10,000,000


$

1,624,643

Trade accounts payable


7,384,165



11,413,505



1,854,287

Trade accounts payable- related parties


3,994,718



-



-

Other payables 


1,964,691



1,765,079



286,762

Other payable- related parties


4,239,675



3,306,024



537,111

Deferred revenue


3,381,382



4,419,824



718,063

Advances from customers


470,700



801,385



130,196

Accrued payroll and employees' welfare


1,992,783



417,624



67,849

Accrued expenses


488,730



203,051



32,989

Income before income tax


6,754,428



7,589,846



1,233,079

Short-term borrowings- related parties


5,503,279



5,207,728



846,070

Net Income


570,375



-



-

Deferred tax liability


-



180,186



29,274

Warrants liability 


-



5,021,621



815,834

Total current liabilities


46,744,926



50,325,873



8,176,157










Comprehensive income


















Comprehensive income attributable to Recon
Technology, Ltd









Common stock, ($ 0.0185 U.S. dollar par value, 25,000,000 shares authorized; 3,951,811 and 4,717,336 shares issued and outstanding as of June 30, 2013 and June 30, 2014, respectively)


529,979



616,865



100,217

Earnings per common share - basic 


69,516,447



83,061,058



13,494,453

Earnings per common share - diluted


3,023,231



4,148,929



674,053

Unappropriated retained earnings


8,749,963



8,431,453



1,369,810

Accumulated other comprehensive loss


(293,201)



(279,275)



(45,374)

Total shareholders' equity


81,526,419



95,979,030



15,593,159

Non-controlling interest


7,200,991



8,225,479



1,336,348

Total equity


88,727,410



104,204,509



16,929,507

Total Liabilities and Equity

¥

135,472,336


¥

154,530,382


$

25,105,664










The accompanying notes are an integral part of these consolidated financial statements

 

 RECON TECHNOLOGY, LTD
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


For the years ended


June 30,



2013



2014


2014



RMB



RMB


USD










Revenues









Hardware and software

¥

41,408,517


¥

86,229,283


$

14,009,176

Service


25,464,003



477,778



77,622

Hardware and software - related parties


9,713,209



6,740,047



1,095,017

Total revenues


76,585,729



93,447,108



15,181,815










Cost of revenues









Hardware and software

¥

26,617,786


¥

57,333,670


$

9,314,672

Service


18,567,123



77,107



12,527

Hardware and software - related parties


6,346,850



3,619,470



588,035

Total cost of revenues


51,531,759



61,030,247



9,915,234

Gross profit


25,053,970



32,416,861



5,266,581



















Selling and distribution expenses


6,126,095



5,293,343



859,979

General and administrative expenses


10,978,942



16,198,947



2,631,750

Research and development expenses


8,513,680



8,094,333



1,315,040

Operating expenses


25,618,717



29,586,623



4,806,769



















Income (loss) from operations


(564,747)



2,830,238



459,812










Other income (expenses)









Subsidy income


2,257,344



1,250,509



203,163

Interest income


570,442



384,182



62,416

Interest expense


(1,557,204)



(952,574)



(154,759)

Loss from investment


-



(1,535,250)



(249,423)

Change in fair value of warrants liability


-



60,647



9,853

Gain(loss)from foreign currency exchange


233,478



(188,495)



(30,624)

Other income (expense)


(32,901)



939,699



152,668










Income before income tax


906,412



2,788,956



453,106

Provision for income tax


286,871



961,136



156,150

Net Income


619,541



1,827,820



296,956










Less: Net income attributable to non-controlling interest


579,843



1,020,632



165,816

Net Income attributable to Recon Technology, Ltd

¥

39,698


 ¥ 

807,188


$

131,140










Comprehensive income









Net income 


619,541



1,827,820



296,956

Foreign currency translation adjustment


(3,004)



17,783



2,889

Comprehensive income


616,537



1,845,603



299,845

Less: Comprehensive income attributable to non-controlling interest


579,543



1,022,410



166,105

Comprehensive income attributable to Recon Technology, Ltd

¥

36,994


 ¥ 

823,193


$

133,740










Earnings per common share - basic 

¥

0.01


¥

0.19


$

0.03

Earnings per common share - diluted

¥

0.01


¥

0.18


$

0.03

Weighted - average shares -basic 


3,951,811



4,303,955



4,303,955

Weighted - average shares -diluted


3,951,811



4,368,162



4,368,162










The accompanying notes are an integral part of these consolidated financial statements

 

RECON TECHNOLOGY, LTD 

CONSOLIDATED STATEMENTS OF CASH FLOWS 











For the years ended June 30,


2013


2014


2014


RMB


RMB


U.S. Dollars










Cash flows from operating activities:









Net income 

¥

619,541


¥

1,827,820


$

296,956

Adjustments to reconcile net income to net cash provided by (used in) operating activities:









Depreciation


618,552



595,647



96,771

Loss from disposal of  equipment


38,006



128,902



20,942

Provision/(recovery of) for doubtful accounts


(749,121)



1,518,778



246,747

Share based compensation


1,852,656



2,429,028



394,630

Loss from investment


-



1,535,250



249,423

Deferred tax provision/(benefit)


100,080



(23,054)



(3,745)

Change in fair value of warrants liability


-



(60,647)



(9,853)

Restricted shares issued for services


-



407,593



66,219

Changes in operating assets and liabilities:









Notes receivable


(2,578,855)



2,578,855



418,972

Trade accounts receivable


25,107,519



(5,291,233)



(859,636)

Trade accounts receivable-related parties


672,175



(3,819,299)



(620,500)

Inventories


11,010,230



(1,065,532)



(173,111)

Other receivable, net


(4,263,858)



(981,099)



(159,395)

Other receivables related parties, net


(724,799)



(671,905)



(109,161)

Purchase advance, net


(2,190,796)



(6,879,156)



(1,117,617)

Purchase advance-related party, net


699,500



-



-

Tax recoverable


2,215,072



575,650



93,523

Prepaid expense


(1,952,620)



(146,708)



(23,835)

Prepaid expense - related party, net


(366,000)



136,000



22,095

Trade accounts payable


(4,521,395)



4,029,340



654,624

Trade accounts payable-related parties


(1,344,513)



(3,994,718)



(648,999)

Other payables


(377,135)



(199,612)



(32,430)

Other payables-related parties


3,140,416



(933,651)



(151,685)

Deferred income


90,309



1,038,442



168,710

Advances from customers


(465,424)



330,685



53,724

Accrued payroll and employees' welfare


1,043,204



(1,575,159)



(255,907)

Accrued expenses


12,314



(285,679)



(46,413)

Taxes payable


(2,927,192)



835,418



135,726

Net cash provided by (used in) operating activities


24,757,866



(7,960,044)



(1,293,225)










Cash flows from investing activities:









Purchase of property and equipment


(753,583)



(477,957)



(77,651)

Long-term investment


(1,549,450)



-



-

Proceeds from disposal of equipment


162,000



141,716



23,024

Net cash used in investing activities


(2,141,033)



(336,241)



(54,627)










Cash flows from financing activities:









Proceeds from short-term bank loans


10,000,000



23,500,000



3,817,910

Repayments of short-term bank loans


(23,000,000)



(23,500,000)



(3,817,910)

Proceeds from short-term borrowings


579,073



-



-

Proceeds from borrowings-related parties


1,962,450



5,007,728



813,577

Repayment of  short-term borrowings


(2,775,764)



(570,375)



(92,666)

Repayment of short-term borrowings-related parties


(582,477)



(5,303,279)



(861,594)

Proceeds from sale of common stock, net of issuance costs


-



12,132,882



1,971,160

Proceeds from stock options exercised


-



2,704,909



439,451

Capital contribution in VIE


20,000



-



-

Net cash provided by (used in) financing activities


(13,796,718)



13,971,865



2,269,928










Effect of exchange rate fluctuation on cash and cash equivalents


(3,006)



68,614



11,150










Net increase (decrease) in cash and cash equivalents


8,817,109



5,744,194



933,226

Cash and cash equivalents at beginning of period


3,533,283



12,350,392



2,006,497

Cash and cash equivalents at end of period

¥

12,350,392


¥

18,094,586


$

2,939,723






-



-










Supplemental cash flow information









Cash paid during the period for interest

¥

1,356,581


¥

939,416


$

152,622

Cash paid during the period for taxes

¥

832,028


¥

704,982


$

114,534










Non-cash investing and financing activities









Issurance of common stock to prepay professional services

¥

-


¥

1,002,721


$

165,142










The accompanying notes are an integral part of these consolidated financial statements

 

SOURCE Recon Technology, Ltd.


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