Recon Technology, Ltd Reports Financial Results for the First Six Months of Fiscal Year 2021
Recon Technology, Ltd (Nasdaq: RCON) reported a 17.2% decline in total revenues for the first six months of Fiscal Year 2021, amounting to $3.9 million. Despite a significant increase of 10,618.7% in revenue from oily sludge and wastewater processing, revenue from automation products decreased by 44.1%. Gross profit fell 43.9% to $1.0 million, leading to a net loss of $1.4 million. The company anticipates increased orders and capital expenditures from Chinese oil companies in 2021, while focusing on digital transformation and enhancing operational efficiency.
- Revenue from oily sludge and wastewater processing increased by 10,618.7%, totaling $0.4 million.
- Management anticipates increased orders and capital expenditures in 2021.
- Acquired 51% of Future Gas Station (Beijing) Technology, Ltd, expanding investment in the digitalization of gas station operations.
- Total revenues decreased by 17.2% to $3.9 million due to a decline in automation product sales.
- Gross profit decreased by 43.9% to $1.0 million, with a gross profit margin drop to 26.7%.
- Net loss increased to $1.4 million, up from $1.0 million in the same period last year.
BEIJING, April 5, 2021 /PRNewswire/ -- Recon Technology, Ltd (Nasdaq: RCON) ("Recon" or the "Company"), today announced its financial results for the first six months of Fiscal Year 2021.
First Six Months of Fiscal 2021 Financial:
- Total revenues for the six months ended December 31, 2020 decreased by
17.2% to$3.9 million (RMB25.2 million), while revenue from oily sludge and waste water increased by 10,618.7% or$0.4 million (RMB2.8 million). - Gross profit for the six months ended December 31, 2020 was
$1.0 million (RMB6.7 million). Gross profit margin for the six months ended December 31, 2020 was26.7% , representing a decrease of 12.7 percentage points compared to the six months ended December 31, 2019. - Net loss attributable to Recon for the six months ended December 31, 2020 was
$1.4 million (RMB8.9 million), or$0.19 (RMB1.22) per basic and diluted share, compared to RMB6.7 million, or RMB1.51 per basic and diluted share, for the six months ended December 31, 2019.
Management Commentary
Mr. Shenping Yin, co-founder and CEO of Recon stated, "During the six months period ended December 31, 2020, our management focused on fund reserve and cash management to prepare for a rapid development in the coming year. We believe oil companies in China will continue to increase their capital expenditures in 2021. We expect more orders to be released in year 2021 which might be a busy year of the overall oil industry. We expect our business will benefit from this trend and our numbers will be improved from the second half year of calendar 2021."
Mr. Yin continued, "Besides, the oil industry is experiencing digital transformation. We believe oil companies will continue to increase their usages of intelligent solutions to improve the operation efficiency. We have been devoting resources and participating testing projects with our clients to develop leading solutions. We will continue to enhance our competitive strength through up-gradation with big data and intelligent analysis. We have also seen the trend of digitalization and intelligence in downstream of the oil and gas industry, especially in the management and operation of gas stations in China. We have acquired
First Six Months Fiscal 2021 Financial Results:
Revenue
Total revenues for the six months ended December 31, 2020 decreased by RMB5.2 million (
Revenue from automation product and software decreased by RMB10.0 million (
Revenue from equipment and accessories increased by RMB1.9 million (
Revenue from oilfield environmental protection projects increased by RMB2.8 million (
Cost and Margin
Total cost of revenues increased slightly from RMB18.4 million for the six months ended December 31, 2019 to RMB18.5 million (
Gross profit decreased by RMB5.3 million (
Operating Expenses
Selling and distribution expenses maintained at the same level of RMB2.7 million (
General and administrative expenses decreased by RMB0.4 million (
Provision for doubtful accounts was RMB25,537 (
Research and development expenses increased from approximately RMB2.9 million for the six months ended December 31, 2019 to RMB3.8 million (
Net Loss
Loss from operations was RMB9.1 million (
Net loss was RMB10.0 million (
As of December 31, 2020, the Company had cash of RMB70.8 million (
Net cash used in operating activities was RMB16.7 million (
Exchange Rate
The translation of RMB amounts into U.S. dollars are included solely for the convenience of readers and have been made at the rate of RMB6.5326 to
About Recon Technology, Ltd
Recon Technology, Ltd (NASDAQ: RCON) is China's first NASDAQ-listed non-state owned oil and gas field service company. Recon supplies China's largest oil exploration companies, Sinopec (NYSE: SNP) and The China National Petroleum Corporation ("CNPC"), with advanced automated technologies, efficient gathering and transportation equipment and reservoir stimulation measure for increasing petroleum extraction levels, reducing impurities and lowering production costs. Through the years, RCON has taken leading positions on several segmented markets of the oil and gas filed service industry. RCON also has developed stable long-term cooperation relationship with its major clients, and its products and service are also well accepted by clients. For additional information please visit: www.recon.cn.
Safe Harbor Statement
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, the effect of novel coronavirus and other health matters on target markets, 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.
For more information, please contact:
Ms. Liu Jia
Chief Financial Officer
Recon Technology, Ltd
Phone: +86 (10) 8494-5188
Email: info@recon.cn
RECON TECHNOLOGY, LTD | ||||||||||||
CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS | ||||||||||||
(UNAUDITED) | ||||||||||||
As of June 30 | As of | As of | ||||||||||
2020 | 2020 | 2020 | ||||||||||
RMB | RMB | U.S. Dollars | ||||||||||
ASSETS | ||||||||||||
Current assets | ||||||||||||
Cash | ¥ | 30,336,504 | ¥ | 70,807,497 | $ | 10,839,024 | ||||||
Notes receivable | 4,180,885 | 7,789,997 | 1,192,472 | |||||||||
Trade accounts receivable, net | 48,244,015 | 35,471,068 | 5,429,817 | |||||||||
Trade accounts receivable- related party, net | 3,068,920 | - | - | |||||||||
Inventories, net | 1,985,723 | 2,117,754 | 324,180 | |||||||||
Other receivables, net | 6,350,802 | 11,004,821 | 1,684,589 | |||||||||
Loans to third parties | 3,200,377 | 950,000 | 145,423 | |||||||||
Purchase advances, net | 178,767 | 82,437 | 12,619 | |||||||||
Contract assets, net | 31,537,586 | 45,621,966 | 6,983,690 | |||||||||
Prepaid expenses | 198,294 | - | - | |||||||||
Total current assets | 129,281,873 | 173,845,540 | 26,611,814 | |||||||||
Property and equipment, net | 29,756,879 | 29,078,178 | 4,451,210 | |||||||||
Land use right, net | 1,280,648 | 1,267,028 | 193,953 | |||||||||
Investment in unconsolidated entity | 31,541,850 | 31,290,554 | 4,789,875 | |||||||||
Long-term other receivables, net | 3,640 | - | - | |||||||||
Operating lease right-of-use assets (including | 2,549,914 | 2,070,548 | 316,954 | |||||||||
Total Assets | ¥ | 194,414,804 | ¥ | 237,551,848 | $ | 36,363,806 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
Current liabilities | ||||||||||||
Short-term bank loans | ¥ | 9,520,000 | ¥ | 12,020,000 | $ | 1,839,990 | ||||||
Convertible notes payable | - | 42,448,810 | 6,497,951 | |||||||||
Trade accounts payable | 23,034,347 | 19,273,046 | 2,950,267 | |||||||||
Other payables | 2,609,486 | 1,563,002 | 239,260 | |||||||||
Other payable- related parties | 4,498,318 | 1,655,668 | 253,445 | |||||||||
Contract liabilities | 3,486,033 | 6,686,592 | 1,023,566 | |||||||||
Accrued payroll and employees' welfare | 1,917,635 | 954,304 | 146,081 | |||||||||
Investment payable | 6,400,000 | 6,400,000 | 979,695 | |||||||||
Taxes payable | 1,108,288 | 1,381,912 | 211,539 | |||||||||
Short-term borrowings | 200,000 | 215,699 | 33,019 | |||||||||
Short-term borrowings - related parties | 10,230,746 | 12,009,174 | 1,838,333 | |||||||||
Long-term borrowings - related party - current portion | 847,346 | 882,900 | 135,152 | |||||||||
Operating lease liabilities - current (including | 1,328,976 | 1,333,113 | 204,069 | |||||||||
Total Current Liabilities | 65,181,175 | 106,824,220 | 16,352,367 | |||||||||
Operating lease liabilities - non-current (including | 1,210,088 | 729,909 | 111,733 | |||||||||
Long-term borrowings - related party | 7,379,253 | 6,942,795 | 1,062,785 | |||||||||
Total Liabilities | 73,770,516 | 114,496,924 | 17,526,885 | |||||||||
Commitments and Contingencies | ||||||||||||
Equity | ||||||||||||
Common stock, ( | 4,577,233 | 5,312,021 | 813,150 | |||||||||
Additional paid-in capital | 282,505,455 | 295,104,195 | 45,173,769 | |||||||||
Statutory reserve | 4,148,929 | 4,148,929 | 635,107 | |||||||||
Accumulated deficit | (184,027,586) | (192,963,238) | (29,538,302) | |||||||||
Accumulated other comprehensive gain | 2,825,731 | 1,894,365 | 289,984 | |||||||||
Total stockholders' equity | 110,029,762 | 113,496,272 | 17,373,708 | |||||||||
Non-controlling interests | 10,614,526 | 9,558,652 | 1,463,213 | |||||||||
Total equity | 120,644,288 | 123,054,924 | 18,836,921 | |||||||||
Total Liabilities and Equity | ¥ | 194,414,804 | ¥ | 237,551,848 | $ | 36,363,806 | ||||||
* Retrospectively restated for effect of stock split on December 27, 2019. |
RECON TECHNOLOGY, LTD | ||||||||||||
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||||||||||||
(UNAUDITED) | ||||||||||||
For the six months ended | ||||||||||||
December 31, | ||||||||||||
2019 | 2020 | 2020 | ||||||||||
RMB | RMB | USD | ||||||||||
Revenues | ||||||||||||
Revenues - third party | ¥ | 30,405,153 | ¥ | 25,083,622 | $ | 3,839,734 | ||||||
Revenues - related party | - | 85,657 | 13,112 | |||||||||
Revenues | 30,405,153 | 25,169,279 | 3,852,847 | |||||||||
Cost of revenues | ||||||||||||
Cost of revenues - third party | 18,437,241 | 18,452,239 | 2,824,620 | |||||||||
Cost of revenues | 18,437,241 | 18,452,239 | 2,824,620 | |||||||||
Gross profit | 11,967,912 | 6,717,040 | 1,028,227 | |||||||||
Selling and distribution expenses | 2,660,873 | 2,750,389 | 421,022 | |||||||||
General and administrative expenses | 13,366,413 | 13,009,013 | 1,991,385 | |||||||||
Provision for (net recovery of) doubtful accounts | 25,537 | (3,697,024) | (565,931) | |||||||||
Research and development expenses | 2,895,286 | 3,756,839 | 575,087 | |||||||||
Operating expenses | 18,948,109 | 15,819,217 | 2,421,563 | |||||||||
Loss from operations | (6,980,197) | (9,102,177) | (1,393,336) | |||||||||
Other income (expenses) | ||||||||||||
Subsidy income | 854,389 | 222,038 | 33,989 | |||||||||
Interest income | 85,745 | 20,168 | 3,087 | |||||||||
Interest expense | (761,322) | (1,000,182) | (153,105) | |||||||||
Income (loss) from investment in unconsolidated entity | 141,288 | (251,296) | (38,468) | |||||||||
Foreign exchange transaction gain (loss) | 209 | (78,784) | (12,060) | |||||||||
Other income (loss) | (60,760) | 50,369 | 7,711 | |||||||||
Other income (expense), net | 259,549 | (1,037,687) | (158,846) | |||||||||
Loss before income tax | (6,720,648) | (10,139,864) | (1,552,182) | |||||||||
Income tax expenses (benefit) | 316,799 | (98,338) | (15,053) | |||||||||
Net loss | (7,037,447) | (10,041,526) | (1,537,129) | |||||||||
Less: Net loss attributable to non-controlling interests | (336,250) | (1,105,874) | (169,284) | |||||||||
Net loss attributable to Recon Technology, Ltd | ¥ | (6,701,197) | ¥ | (8,935,652) | $ | (1,367,845) | ||||||
Comprehensive loss | ||||||||||||
Net loss | (7,037,447) | (10,041,526) | (1,537,129) | |||||||||
Foreign currency translation adjustment | 9,610 | (931,366) | (142,571) | |||||||||
Comprehensive loss | (7,027,837) | (10,972,892) | (1,679,700) | |||||||||
Less: Comprehensive loss attributable to non-controlling interests | (336,250) | (1,105,874) | (169,284) | |||||||||
Comprehensive loss attributable to Recon Technology, Ltd | ¥ | (6,691,587) | ¥ | (9,867,018) | $ | (1,510,416) | ||||||
Loss per common share - basic and diluted | ¥ | (1.51) | ¥ | (1.22) | $ | (0.19) | ||||||
Weighted - average shares -basic and diluted* | 4,449,980 | 7,330,866 | 7,330,866 | |||||||||
* Retrospectively restated for effect of stock split on December 27, 2019. |
RECON TECHNOLOGY, LTD | ||||||||||||
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS | ||||||||||||
(UNAUDITED) | ||||||||||||
For the six months ended December 31, | ||||||||||||
2019 | 2020 | 2020 | ||||||||||
RMB | RMB | U.S. Dollars | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net loss | ¥ | (7,037,447) | ¥ | (10,041,526) | $ | (1,537,129) | ||||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
Depreciation and amortization | 411,592 | 1,369,590 | 209,653 | |||||||||
Loss from disposal of equipment | 3,189 | 1,095 | 168 | |||||||||
Provision for (net recovery of) doubtful accounts | 25,537 | (3,697,024) | (565,931) | |||||||||
Provision for slow moving inventories | 25,312 | 423,714 | 64,861 | |||||||||
Amortization of right of use assets | 718,000 | 542,896 | 83,105 | |||||||||
Restricted shares issued for management and employees | 4,057,093 | 3,403,513 | 521,001 | |||||||||
Loss (income) from investment in unconsolidated entity | (141,288) | 251,296 | 38,468 | |||||||||
Interest expenses related to convertible notes | - | 84,607 | 12,951 | |||||||||
Restricted shares issued for services | 33,927 | - | - | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
Notes receivable | (986,826) | (3,609,112) | (552,473) | |||||||||
Trade accounts receivable | 5,412,201 | 15,866,295 | 2,428,770 | |||||||||
Trade accounts receivable-related party | - | 3,409,912 | 521,980 | |||||||||
Inventories | (551,200) | (765,595) | (117,195) | |||||||||
Other receivable | 1,364,500 | (4,262,681) | (652,520) | |||||||||
Other receivables-related parties | - | (23,800) | (3,643) | |||||||||
Purchase advance | 1,108,902 | 96,330 | 14,746 | |||||||||
Contract assets | (9,951,981) | (14,262,839) | (2,183,318) | |||||||||
Prepaid expense | 116,917 | (19,306) | (2,955) | |||||||||
Prepaid expense - related parties | 217,600 | 217,600 | 33,310 | |||||||||
Operating lease liabilities | (610,000) | (539,572) | (82,596) | |||||||||
Trade accounts payable | 362,758 | (3,761,301) | (575,770) | |||||||||
Other payables | (160,316) | (850,478) | (130,189) | |||||||||
Other payables-related parties | 1,790,155 | (2,842,651) | (435,145) | |||||||||
Advance from customers | 1,904,753 | 3,200,559 | 489,933 | |||||||||
Accrued payroll and employees' welfare | 1,501,406 | (963,905) | (147,552) | |||||||||
Accrued expenses | - | (198,483) | (30,383) | |||||||||
Taxes payable | 650,855 | 273,624 | 41,886 | |||||||||
Net cash provided by (used in) operating activities | 265,639 | (16,697,242) | (2,555,967) | |||||||||
Cash flows from investing activities: | ||||||||||||
Purchases of property and equipment | (12,967) | (375,569) | (57,491) | |||||||||
Proceeds from disposal of equipment | 900 | - | - | |||||||||
Repayments from loans to third parties | 4,960,000 | 3,200,377 | 489,905 | |||||||||
Payments made for loans to third parties | - | (950,000) | (145,423) | |||||||||
Payments and prepayments for construction in progress | (1,297,663) | - | - | |||||||||
Net cash provided by investing activities | 3,650,270 | 1,874,808 | 286,991 | |||||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from short-term bank loans | - | 3,520,000 | 538,832 | |||||||||
Repayments of short-term bank loans | - | (1,020,000) | (156,139) | |||||||||
Proceeds from short-term borrowings | - | 2,460,000 | 376,570 | |||||||||
Repayments of short-term borrowings | (1,081,096) | (2,460,000) | (376,570) | |||||||||
Proceeds from short-term borrowings-related parties | 13,115,000 | 10,100,000 | 1,546,081 | |||||||||
Repayments of short-term borrowings-related parties | (10,195,000) | (8,320,000) | (1,273,604) | |||||||||
Repayments of long-term borrowings-related party | (365,530) | (399,422) | (61,142) | |||||||||
Proceeds from sale of common stock, net of issuance costs | - | 9,930,015 | 1,520,060 | |||||||||
Proceeds from issuance of convertible notes | - | 42,364,203 | 6,485,000 | |||||||||
Capital contribution by non-controlling shareholders | 405,000 | 50,000 | 7,654 | |||||||||
Net cash provided by financing activities | 1,878,374 | 56,224,796 | 8,606,742 | |||||||||
Effect of exchange rate fluctuation on cash | 9,611 | (931,369) | (142,574) | |||||||||
Net increase in cash | 5,803,894 | 40,470,993 | 6,195,192 | |||||||||
Cash at beginning of period | 4,521,325 | 30,336,504 | 4,643,832 | |||||||||
Cash at end of period | ¥ | 10,325,219 | ¥ | 70,807,497 | $ | 10,839,024 | ||||||
Supplemental cash flow information | ||||||||||||
Cash paid during the period for interest | ¥ | 718,201 | ¥ | 849,409 | $ | 130,025 | ||||||
Cash received during the period for taxes | ¥ | (2,002) | ¥ | (98,338) | $ | (15,053) | ||||||
Non-cash investing and financing activities | ||||||||||||
Right-of-use assets obtained in exchange for operating lease obligations | ¥ | 1,228,963 | ¥ | 63,530 | $ | 9,725 | ||||||
Inventories used as fixed assets | ¥ | - | ¥ | 302,795 | $ | 46,351 | ||||||
Payable for construction in progress | ¥ | 236,302 | ¥ | - | $ | - | ||||||
Receivable for disposal of property and equipment | ¥ | 5,000 | ¥ | - | $ | - | ||||||
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SOURCE Recon Technology, Ltd.
FAQ
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