BEIJING, Feb. 27, 2019 /PRNewswire/ -- Recon Technology,
Ltd. (Nasdaq: RCON) ("Recon" or the "Company"), a China-based
independent solutions integrator in the oilfield service,
environmental protection, electric power and coal chemical
industries, today announced its financial results for the first six
months of fiscal year 2019.
Management Commentary
Mr. Shenping Yin, co-founder and CEO of Recon stated,
"During the first six months of our 2019 fiscal year, our total
revenues decreased from RMB53.2
million to RMB42.3 million as
compared to the same period last year, largely because of the
discontinuation of our temporary business in low-margin
equipment and accessories offerings which we conducted in the same
period last year. We did not conduct this business this year
as our new factories are in stable operation and we are
allocating our resources to more effective business. However, our
gross profit and gross margin increased from the same period last
year, primarily because of our automation product and software and
oilfield environmental protection segments. Our operational results
were improved as we continue to focus on higher margin
business."
Mr. Yin continued, "As our operations improved and loss narrowed
during this period compared to the same period in 2018, we continue
to maintain our prior expectation for fiscal year 2019 to achieve
up to RMB 101 million in revenue
because of the rapid development of our China Energy Investment
Corporation ("China Energy") projects and our launch of several new
factories and business lines. As of today, we have received orders
of RMB 33.38 million from China
Energy and the total value of the contracts with China Energy which
we will perform or are performing exceeds RMB 19 million."
First Six Months of Fiscal 2019 Financial Highlights
(all comparable to the prior year period):
|
For the Six
Months Ended December 31,
|
(RMB
millions, except per share data)
|
|
2018
|
|
2017
|
|
%
Change
|
Revenue
|
|
42.3
|
|
53.2
|
|
-20.6%
|
Automation
product and software
|
|
29.0
|
|
13.6
|
|
112.9%
|
Equipment and
accessories
|
|
10.3
|
|
39.2
|
|
-73.7%
|
Oilfield
environmental protection
|
|
3.0
|
|
0.4
|
|
596.1%
|
Gross
profit
|
|
15.2
|
|
6.0
|
|
151.9%
|
Gross
margin
|
|
36.0%
|
|
11.4%
|
|
24.6 pp
|
Loss from
operations
|
|
(8.7)
|
|
(17.5)
|
|
-50.1%
|
Net loss attributable
to Recon Technology, Ltd
|
|
(10.1)
|
|
(17.0)
|
|
-40.6%
|
Adjusted
EBITDA
|
|
0.9
|
|
(5.2)
|
|
116.8%
|
Loss per
share
|
|
(0.56)
|
|
(2.21)
|
|
-74.8%
|
Adjusted
EPS
|
|
(0.03)
|
|
(0.70)
|
|
-95.7%
|
|
*Note: pp represents
percentage points
|
- Total revenues for the six months ended December 31, 2018 decreased by 20.6% to
RMB42.3 million ($6.1 million).
- The revenue of automation product and software for the six
months ended December 31, 2018
increased by 112.9% to RMB29.0
million ($4.2 million).
- Gross profit for the six months ended December 31, 2018 increased by 151.9% to
RMB15.2 million ($2.2 million). Gross profit margin for the six
months ended December 31, 2018
increased by 24.6 percentage points to 36.0%.
- Net loss attributable to Recon for the six months ended
December 31, 2018 was RMB10.1 million ($1.5
million), or RMB0.56
($0.08) per basic and diluted share,
compared to RMB17.0 million, or
RMB2.21 per basic and diluted share,
for the six months ended December 31,
2017.
First Six Months Fiscal 2019 Financial Results
Revenue
Total revenues for the six months ended December 31, 2018 decreased by RMB11.0 million, or 20.6% to RMB42.3 million ($6.1
million) from RMB53.2 million
for the six months ended December 31,
2017. The decrease in total revenues was mainly due to the
decreased revenue from equipment and accessories segments, offset
by increased revenue from the automation product and software and
oilfield environmental protection segments.
Revenue from automation product and software increased by
RMB15.4 million, or 112.9% to
RMB29.0 million ($4.2 million) for the six months ended
December 31, 2018 from RMB13.6 million for the six months ended
December 31, 2017. The increased
revenue was mainly due to automation business projects for China
Energy. The Company recorded RMB 9.4
million revenue from these projects during the six months
ended December 31, 2018.
Revenue from equipment and accessories decreased by RMB28.9 million, or 73.7% to RMB10.3 million ($1.5
million) for the six months ended December 31, 2018 from RMB39.2 million for the six months ended
December 31, 2017. For the six months
ended December 31, 2017, the Company
accepted some low-margin contracts. The Company did not engage in
this type of temporary business in the same period of fiscal year
2019 and the revenue from these low-margin business decreased
dramatically. Gross margin from this segment increased by
26.5 percentage points to 35.1% for the six months ended
December 31, 2018 from 8.6% from the
six months ended December 31,
2017.
Revenue from oilfield environmental protection increased by
RMB2.6 million, or 596.1% to
RMB3.0 million ($0.4 million) for the six months ended
December 31, 2018 from RMB0.4 million for the six months ended
December 31, 2017, as service
requirements from oilfield companies have increased during the
period.
Cost and Margin
Total cost of revenues decreased by RMB20.2 million ($2.9
million), or 42.7%, to RMB27.0
million ($3.9 million)
for the six months ended December 31,
2018 from RMB47.2 million
for the six months ended December 31,
2017. The decrease was mainly caused by significant decrease
in cost of revenue incurred in equipment and accessories.
Cost of revenue from automation product and software increased
by RMB7.5 million ($1.1 million), or 67.7% to RMB18.5 million ($2.7
million) for the six months ended December 31, 2018 from RMB11.0 million for the six months ended
December 31, 2017. The increase was
primarily attributable to a significant increase from business of
China Energy contracts, which resulted in an amount of RMB7.5 million increase in cost of revenues in
this segment.
Cost of revenue from equipment and accessories decreased by
RMB29.1 million ($4.2 million), or 81.3% to RMB6.6 million ($1.0
million) for the six months ended December 31, 2018 from RMB35.8 million for the six months ended
December 31, 2017. The decrease was
primarily attributable to quickly decreased sales of heating
related products with low margin to general industry clients.
Cost of revenue from oilfield environmental protection increased
by RMB1.5 million ($0.2 million), or 473.1% to RMB1.8 million ($0.3
million) for the six months ended December 31, 2018 from RMB0.3 million for the six months ended
December 31, 2017. The increase was
mainly due to the increased oily sludge treatment processing
projects during the six months ended December 31, 2018. The Company expects this part
will increase in the coming year as its new subsidiary Gan Su BHD
has begun its trial operation.
Gross profit increased by RMB9.2
million, or 151.9% to RMB15.2
million ($2.2 million) for the
six months ended December 31,
2018 from RMB6.0 million from
the six months ended December 31,
2017. Gross margin increased by 24.6 percentage points to
36.0% for the six months ended December
31, 2018 from 11.4% from the six months ended
December 31, 2017. The main reason of
the increase in gross margin and gross profit was that as the
recovered industry caused the Company's clients to have higher
budgets on operations and the clients were more willing to launch
higher-expenditure projects which produced higher margins to the
Company. In addition, the Company entered into official operation
of some new high-margin businesses in energy consumption market
during this year.
Operating Expenses
Selling and distribution expenses increased by RMB1.9 million, or 64.7% to RMB4.9 million ($0.7
million) for the six months ended December 31, 2018 from RMB3.0 million for the six months ended
December 31, 2017. This increase was
primarily due to an increase in traveling expense, shipping cost
and service fees as the Company expanded its market of China Energy
projects and new industries.
General and administrative expenses increased by RMB0.2 million, or 1.2% to RMB18.9 million ($2.7
million) for the six months ended December 31, 2018 from RMB18.7 million for the six months ended
December 31, 2017. The increase in
general and administrative expenses was mainly due to an increase
in stock-based compensation expense and audit fees, while the
increase was partially offset by the decrease in investor
relationship expenses during the six months ended December 31, 2018.
Reversal of provision for doubtful accounts was RMB1.5 million ($0.2
million) for the six months ended December 31, 2018, compared to provision for
doubtful accounts of RMB0.08 million
for the six months ended December 31,
2017. The decrease in provision of doubtful accounts was
resulted from management's successful collection of
long-outstanding receivables. Management will continue to monitor
accounts receivable to maintain the provision at a lower level.
Net Loss
Loss from operations was RMB8.7
million ($1.3 million) for the
six months ended December 31, 2018,
compared to a loss of RMB17.5 million
for the six months ended December 31,
2017. This RMB8.8 million
($1.3 million) decrease in loss from
operations was primary due to an increase in gross profit, as well
as an increase in reversal of doubtful accounts and partially
offset by an increase in selling and distribution expenses as
discussed above.
Other expense, net was RMB1.2
million ($0.2 million) for the
six months ended December 31, 2018,
compared to other expense, net of RMB0.09
million for the six months ended December 31, 2017. The RMB1.1 million ($0.2
million) increase in other expense, net was primarily due to
the increased loss from investment in unconsolidated entity of
RMB0.8 million ($0.1 million). The Company made a deal to
invest into Future Gas Station (Beijing) Technology, Ltd ("FGS") on
December 2017 and increased its
investment into FGS with additional RMB10
million in cash and issued 2,435,284 restricted ordinary
shares of Recon (the "Restricted Shares") to the other shareholders
of FGS. As of December 31, 2018, the
Company recorded an investment loss of RMB0.8 million with equity method as FGS was
still in its developing period and earned a net loss.
Net loss attributable to Recon for the six months ended
December 31, 2018 was
RMB10.1 million ($1.5 million), or RMB0.56 ($0.08) per basic and diluted share, compared
to RMB17.0 million, or RMB2.21 per basic and diluted share for the six
months ended December 31, 2017.
EBITDA
Adjusted EBITDA income was RMB0.9
million for the six months ended December 31, 2018, compared to an adjusted EBITDA
loss of RMB 5.2 million for the same
period last year. Please see the section titled "Non-GAAP Financial
Measures" below for a discussion of this metric, which we believe
may be informative for investors but which is not a GAAP financial
measure.
Financial Condition
As of December 31, 2018, the
Company had cash of RMB12.0 million
($1.7 million), compared to
RMB45.3 million as of June 30, 2018. As of December 31, 2018, the Company had working
capital of RMB58.8 million
($8.5 million), compared to
RMB74.8 million as of June 30, 2018.
Net cash used in operating activities was RMB27.0 million ($3.9
million) for the six months ended December 31, 2018, compared to RMB12.7 million for the six months ended
December 31, 2017. Net cash used in
investing activities was RMB8.5
million ($1.2 million) for the
six months ended December 31, 2018,
compared to RMB7.4 million for the
six months ended December 31, 2017.
Net cash provided by financing activities was RMB1.0 million ($0.1
million) for the six months ended December 31, 2018, compared to RMB24.5 million for the six months ended
December 31, 2017.
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 RMB6.8776 to $1.00, the
approximate exchange rate prevailing on December 31, 2018.
Non-GAAP Financial Measures
In addition to the Company's U.S. GAAP results, this press
release includes a discussion of adjusted EBITDA and adjusted
earnings (loss) per share, which are non-GAAP financial measures.
The Company's management defines adjusted EBITDA as earnings before
interest expense, income taxes, depreciation, and amortization
expense, and non-recurring expenses. All of the omitted items are
either (i) non-cash items or (ii) items that the Company does
not consider in assessing the Company's ongoing operating
performance. Because adjusted EBITDA omits non-cash items, the
Company's management believes that adjusted EBITDA is less
susceptible to variances in actual performance resulting from
depreciation, amortization, and other non-cash charges and more
reflective of other factors that affect its operating performance.
The Company's management defines adjusted earnings per share by
eliminating from earnings (loss) per share the impact of a number
of non-recurring items the Company does not consider indicative of
its ongoing performance. Recon's management believes that the use
of these non-GAAP financial measures provides an additional tool
for investors to use in evaluating ongoing operating results and
trends and in comparing the Company's financial measures with other
competitors, many of which present similar non-GAAP financial
measures to investors.
|
For the Six Months
Ended December 31,
|
|
2017
|
|
2018
|
|
RMB
|
|
RMB
|
Reconciliation of
adjusted EBITDA to net loss
|
|
|
|
Net loss
|
(17,604,972)
|
|
(9,945,439)
|
Provision (benefit) for
income taxes
|
9,282
|
|
2,002
|
Interest expense and foreign currency
adjustment
|
286,731
|
|
838,920
|
Provision for (reversal of)
slow moving inventories
|
(68,384)
|
|
65,380
|
Restricted shares issued for
services
|
1,937,867
|
|
516,194
|
Provision for (net recovery
of) doubtful accounts
|
80,539
|
|
(1,494,707)
|
Loss from investment in
unconsolidated entity
|
-
|
|
844,369
|
Share based
compensation
|
3,550,685
|
|
4,672,881
|
Restricted shares issued for
management
|
6,083,148
|
|
4,867,036
|
Depreciation and
amortization
|
481,782
|
|
515,457
|
Adjusted
EBITDA
|
(5,243,322)
|
|
882,093
|
|
|
|
|
|
For the Six Months
Ended December 31,
|
|
2017
|
|
2018
|
|
RMB
|
|
RMB
|
Reconciliation of
net loss attributable to Recon
Technology, Ltd
|
|
|
|
to adjusted net
loss attributable to common
shareholders
|
|
|
|
Net loss attributable to
Recon Technology, Ltd
|
(16,986,810)
|
|
(10,084,243)
|
Special
items:
|
|
|
|
Restricted shares issued for
services
|
1,937,867
|
|
516,194
|
Provision for (net recovery
of) doubtful accounts
|
80,539
|
|
(1,494,707)
|
Provision for (reversal of)
slow moving inventories
|
(68,384)
|
|
65,380
|
Loss from investment in
unconsolidated entity
|
-
|
|
844,369
|
Share based
compensation
|
3,550,685
|
|
4,672,881
|
Restricted shares issued for
management
|
6,083,148
|
|
4,867,036
|
Adjusted net loss
attributable to common stockholders
|
(5,402,955)
|
|
(613,090)
|
|
|
|
|
Reconciliation of
U.S. GAAP loss per share
|
|
|
|
to non U.S. GAAP
adjusted loss per share
|
|
|
|
U.S. GAAP loss per
share
|
|
|
|
Basic and diluted
|
(2.21)
|
|
(0.56)
|
Impact of special
items on earnings per share
|
|
|
|
Basic and diluted
|
1.51
|
|
0.53
|
Non U.S. GAAP
adjusted loss per share
|
|
|
|
Basic and diluted
|
(0.70)
|
|
(0.03)
|
About Recon Technology, Ltd.
Recon Technology,
Ltd. (RCON) is China's first
non-state-owned oil and gas field service company listed on NASDAQ.
Recon supplies China's largest oil exploration companies,
Sinopec (SNP) and 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.
Forward Looking Statements
Forward-Looking Statements in this press release, which are
not historical facts, are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Our actual results, performance or achievements may differ
materially from those expressed or implied by these forward-looking
statements. In some cases, you can identify forward-looking
statements by the use of words such as "may," "could," "expect,"
"intend," "plan," "seek," "anticipate," "believe," "estimate,"
"predict," "potential," "continue," "likely," "will," "would" and
variations of these terms and similar expressions, or the negative
of these terms or similar expressions. Such forward-looking
statements are necessarily based upon estimates and assumptions
that, while considered reasonable by us and our management, are
inherently uncertain. Factors that may cause actual results to
differ materially from current expectations include, among others,
levels of spending in our industry as well as consumer confidence
generally; changes in the competitive environment in our industry
and the markets where we operate; our ability to access the capital
markets; the results of cooperation between parties to cooperation
agreements; and other risks discussed in the Company's filings with
the U.S. Securities and Exchange Commission, including our Annual
Report on Form 20-F, which filings are available from the SEC. We
caution you not to place undue reliance on any forward-looking
statements, which are made as of the date of this press release. We
undertake no obligation to update publicly any of these
forward-looking statements to reflect actual results, new
information or future events, changes in assumptions or changes in
other factors affecting forward-looking statements, except to the
extent required by applicable laws. If we update one or more
forward-looking statements, no inference should be drawn that we
will make additional updates with respect to those or other
forward-looking statements.
For more information, please contact:
In China:
Ms. Jia Liu
Chief Financial Officer
Recon Technology, Ltd.
Phone: +86 (10) 8494-5799
Email: info@recon.cn
In the United
States:
Ms. Tina Xiao
President
Ascent Investor Relations LLC
Phone: +1-917-609-0333
Email: tina.xiao@ascent-ir.com
RECON TECHNOLOGY,
LTD
|
CONDENSED BALANCE
SHEETS
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
As of June
30
|
|
|
As of December
31
|
|
|
As of December
31
|
|
2018
|
|
2018
|
|
2018
|
ASSETS
|
RMB
|
|
RMB
|
|
U.S.
Dollars
|
Current
assets
|
|
|
|
|
|
|
|
|
Cash
|
Â¥
|
45,340,578
|
|
Â¥
|
11,981,820
|
|
$
|
1,742,164
|
Notes
receivable
|
|
3,995,962
|
|
|
3,778,526
|
|
|
549,400
|
Trade accounts
receivable, net
|
|
24,254,007
|
|
|
38,946,200
|
|
|
5,662,801
|
Inventories,
net
|
|
6,758,841
|
|
|
289,129
|
|
|
42,040
|
Other receivables,
net
|
|
7,320,953
|
|
|
10,095,750
|
|
|
1,467,928
|
Purchase advances,
net
|
|
12,654,546
|
|
|
10,055,617
|
|
|
1,462,093
|
Contract costs,
net
|
|
-
|
|
|
23,234,870
|
|
|
3,378,364
|
Prepaid
expenses
|
|
509,682
|
|
|
634,271
|
|
|
92,223
|
Total current
assets
|
|
100,834,569
|
|
|
99,016,183
|
|
|
14,397,013
|
|
|
|
|
|
|
|
|
|
Property and
equipment, net
|
|
3,171,109
|
|
|
2,876,833
|
|
|
418,293
|
Construction in
progress
|
|
11,779,784
|
|
|
21,428,767
|
|
|
3,115,756
|
Land use right,
net
|
|
1,335,126
|
|
|
1,321,507
|
|
|
192,148
|
Investment in
unconsolidated entity
|
|
-
|
|
|
30,804,506
|
|
|
4,478,994
|
Long-term trade
accounts receivable, net
|
|
4,212,829
|
|
|
2,077,829
|
|
|
302,118
|
Prepayments for
construction in progress
|
|
474,100
|
|
|
1,194,200
|
|
|
173,637
|
Total
Assets
|
Â¥
|
121,807,517
|
|
Â¥
|
158,719,825
|
|
$
|
23,077,959
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Trade accounts
payable
|
Â¥
|
8,754,347
|
|
Â¥
|
15,452,084
|
|
$
|
2,246,743
|
Other
payables
|
|
3,255,810
|
|
|
6,220,334
|
|
|
904,437
|
Other payable-
related parties
|
|
3,211,457
|
|
|
3,214,579
|
|
|
467,402
|
Accrued payroll and
employees' welfare
|
|
600,434
|
|
|
885,569
|
|
|
128,762
|
Investment
payable
|
|
-
|
|
|
6,400,000
|
|
|
930,564
|
Taxes
payable
|
|
431,913
|
|
|
1,077,241
|
|
|
156,632
|
Short-term
borrowings
|
|
-
|
|
|
1,031,507
|
|
|
149,982
|
Short-term borrowings
- related parties
|
|
9,018,065
|
|
|
5,198,977
|
|
|
755,934
|
Long-term borroings -
related party - current portion
|
|
719,895
|
|
|
749,671
|
|
|
109,003
|
Total Current
Liabilities
|
|
25,991,921
|
|
|
40,229,962
|
|
|
5,849,459
|
|
|
|
|
|
|
|
|
|
Long-term borrowings
- related party
|
|
8,943,834
|
|
|
8,578,305
|
|
|
1,247,291
|
Total
Liabilities
|
|
34,935,755
|
|
|
48,808,267
|
|
|
7,096,750
|
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
Common stock, ($
0.0185 U.S. dollar par value,
100,000,000 shares authorized; 20,940,633 shares and
18,380,349 shares issued and outstanding as of December
31, 2018 and June 30, 2018, respectively)
|
|
2,279,510
|
|
|
2,603,392
|
|
|
378,535
|
Additional paid-in
capital
|
|
207,490,280
|
|
|
238,656,305
|
|
|
34,700,774
|
Statutory
reserve
|
|
4,148,929
|
|
|
4,148,929
|
|
|
603,257
|
Accumulated
deficit
|
|
(139,424,980)
|
|
|
(149,509,223)
|
|
|
(21,738,733)
|
Accumulated other
comprehensive gain
|
|
1,516,093
|
|
|
2,711,421
|
|
|
394,242
|
Total
stockholders' equity
|
|
76,009,832
|
|
|
98,610,824
|
|
|
14,338,075
|
Non-controlling
interests
|
|
10,861,930
|
|
|
11,300,734
|
|
|
1,643,134
|
Total
equity
|
|
86,871,762
|
|
|
109,911,558
|
|
|
15,981,209
|
Total Liabilities
and Equity
|
Â¥
|
121,807,517
|
|
Â¥
|
158,719,825
|
|
$
|
23,077,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying
notes are an integral part of these unaudited condensed
consolidated financial statements
|
RECON TECHNOLOGY,
LTD
|
CONDENSED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months
ended
|
|
|
|
|
|
December
31,
|
|
|
|
|
|
|
2017
|
|
|
2018
|
|
2018
|
|
|
|
|
|
|
RMB
|
|
|
RMB
|
|
USD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
Â¥
|
53,246,727
|
|
Â¥
|
42,271,729
|
|
$
|
6,146,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
and related tax
|
|
|
|
|
47,198,605
|
|
|
27,034,637
|
|
|
3,930,853
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
|
|
6,048,122
|
|
|
15,237,092
|
|
|
2,215,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and
distribution expenses
|
|
|
|
|
2,981,637
|
|
|
4,909,361
|
|
|
713,824
|
|
General and
administrative expenses
|
|
|
|
|
18,672,141
|
|
|
18,903,138
|
|
|
2,748,528
|
|
Provision for (net
recovery of) doubtful accounts
|
|
|
|
|
80,539
|
|
|
(1,494,707)
|
|
|
(217,331)
|
|
Research and
development expenses
|
|
|
|
|
1,819,720
|
|
|
1,654,702
|
|
|
240,595
|
|
Operating
expenses
|
|
|
|
|
23,554,037
|
|
|
23,972,494
|
|
|
3,485,616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations
|
|
|
|
|
(17,505,915)
|
|
|
(8,735,402)
|
|
|
(1,270,134)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
Subsidy
income
|
|
|
|
|
212,005
|
|
|
55,706
|
|
|
8,100
|
|
Interest
income
|
|
|
|
|
6,299
|
|
|
32,109
|
|
|
4,669
|
|
Interest
expense
|
|
|
|
|
(284,060)
|
|
|
(856,571)
|
|
|
(124,546)
|
|
Loss from investment
in unconsolidated entity
|
|
|
|
|
-
|
|
|
(844,369)
|
|
|
(122,772)
|
|
Foreign exchange
transaction gain (loss)
|
|
|
|
|
(2,671)
|
|
|
17,651
|
|
|
2,566
|
|
Other income
(expense)
|
|
|
|
|
(21,348)
|
|
|
387,439
|
|
|
56,334
|
|
Other expense,
net
|
|
|
|
|
(89,775)
|
|
|
(1,208,035)
|
|
|
(175,649)
|
|
Loss before income
tax
|
|
|
|
|
(17,595,690)
|
|
|
(9,943,437)
|
|
|
(1,445,783)
|
|
Income tax
expenses
|
|
|
|
|
9,282
|
|
|
2,002
|
|
|
291
|
|
Net
loss
|
|
|
|
|
(17,604,972)
|
|
|
(9,945,439)
|
|
|
(1,446,074)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net (loss)
income attributable to non-controlling
interests
|
|
|
|
|
(618,162)
|
|
|
138,804
|
|
|
20,182
|
|
Net loss
attributable to Recon Technology, Ltd
|
|
|
|
Â¥
|
(16,986,810)
|
|
Â¥
|
(10,084,243)
|
|
$
|
(1,466,256)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
(17,604,972)
|
|
|
(9,945,439)
|
|
|
(1,446,074)
|
|
Foreign currency
translation adjustment
|
|
|
|
|
72,268
|
|
|
1,195,328
|
|
|
173,801
|
|
Comprehensive
loss
|
|
|
|
|
(17,532,704)
|
|
|
(8,750,111)
|
|
|
(1,272,273)
|
|
Less: Comprehensive
(loss) income attributable to non-
controlling interests
|
|
|
|
|
(618,162)
|
|
|
138,804
|
|
|
20,182
|
|
Comprehensive loss
attributable to Recon
Technology, Ltd
|
|
|
|
Â¥
|
(16,914,542)
|
|
Â¥
|
(8,888,915)
|
|
$
|
(1,292,455)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per common
share - basic and diluted
|
|
|
|
Â¥
|
(2.21)
|
|
Â¥
|
(0.56)
|
|
$
|
(0.08)
|
|
Weighted - average
shares - basic and diluted
|
|
|
|
|
7,673,960
|
|
|
18,093,034
|
|
|
18,093,034
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying
notes are an integral part of these unaudited condensed
consolidated financial statements
|
RECON TECHNOLOGY,
LTD
|
CONDENSED
STATEMENTS OF CASH FLOWS
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
For the six months
ended December 31,
|
|
|
2017
|
|
2018
|
|
2018
|
|
|
RMB
|
|
RMB
|
|
U.S.
Dollars
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
Â¥
|
(17,604,972)
|
|
Â¥
|
(9,945,439)
|
|
$
|
(1,446,074)
|
Adjustments to
reconcile net loss to net cash used in
operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
481,782
|
|
|
515,457
|
|
|
74,948
|
Gain from disposal of
equipment
|
|
|
(21,470)
|
|
|
-
|
|
|
-
|
Provision for (net
recovery of) doubtful accounts
|
|
|
80,539
|
|
|
(1,494,707)
|
|
|
(217,332)
|
Provision for
(reversal of) slow moving inventories
|
|
|
(68,384)
|
|
|
65,380
|
|
|
9,506
|
Share based
compensation
|
|
|
3,550,685
|
|
|
4,672,881
|
|
|
679,440
|
Restricted shares
issued for management
|
|
|
6,083,148
|
|
|
4,867,036
|
|
|
707,670
|
Loss from investment
in unconsolidated entity
|
|
|
-
|
|
|
844,369
|
|
|
122,772
|
Restricted shares
issued for services
|
|
|
1,937,867
|
|
|
516,194
|
|
|
75,055
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Notes
receivable
|
|
|
318,950
|
|
|
217,436
|
|
|
31,615
|
Trade accounts
receivable, net
|
|
|
(4,506,281)
|
|
|
(11,251,794)
|
|
|
(1,636,018)
|
Inventories,
net
|
|
|
(759,373)
|
|
|
(1,778,189)
|
|
|
(258,550)
|
Other receivable,
net
|
|
|
(1,102,598)
|
|
|
(6,468,866)
|
|
|
(940,577)
|
Purchase advance,
net
|
|
|
(7,471,023)
|
|
|
(12,594,395)
|
|
|
(1,831,233)
|
Prepaid
expense
|
|
|
(574,226)
|
|
|
(124,589)
|
|
|
(18,115)
|
Trade accounts
payable
|
|
|
4,078,075
|
|
|
740,274
|
|
|
107,636
|
Other
payables
|
|
|
175,367
|
|
|
3,244,115
|
|
|
471,696
|
Other
payables-related parties
|
|
|
858,195
|
|
|
3,122
|
|
|
454
|
Accrued payroll and
employees' welfare
|
|
|
(11,224)
|
|
|
285,135
|
|
|
41,459
|
Taxes
payable
|
|
|
1,819,793
|
|
|
645,328
|
|
|
93,831
|
Net cash used in
operating activities
|
|
|
(12,735,150)
|
|
|
(27,041,252)
|
|
|
(3,931,817)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
|
Investment in
unconsolidated entity
|
|
|
(2,000,000)
|
|
|
(3,815,080)
|
|
|
(554,715)
|
Purchases of property
and equipment
|
|
|
(278,432)
|
|
|
(283,129)
|
|
|
(41,167)
|
Proceeds from
disposal of equipment
|
|
|
32,000
|
|
|
-
|
|
|
-
|
Payments for land use
right
|
|
|
(1,322,300)
|
|
|
-
|
|
|
-
|
Payments and
prepayments for construction in progress
|
|
|
(3,837,842)
|
|
|
(4,411,620)
|
|
|
(641,452)
|
Net cash used in
investing activities
|
|
|
(7,406,574)
|
|
|
(8,509,829)
|
|
|
(1,237,334)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
|
Proceeds from
short-term bank loans
|
|
|
45,000
|
|
|
-
|
|
|
-
|
Proceeds from
short-term borrowings
|
|
|
4,600,000
|
|
|
1,031,507
|
|
|
149,982
|
Repayments of
short-term borrowings
|
|
|
(3,000,000)
|
|
|
-
|
|
|
-
|
Proceeds from
short-term borrowings-related parties
|
|
|
16,188,318
|
|
|
5,000,000
|
|
|
727,003
|
Repayments of
short-term borrowings-related parties
|
|
|
(20,256,326)
|
|
|
(5,000,000)
|
|
|
(727,003)
|
Proceeds from
long-term borrowings-related party
|
|
|
10,000,000
|
|
|
-
|
|
|
-
|
Repayments of
long-term borrowings-related party
|
|
|
(51,969)
|
|
|
(334,513)
|
|
|
(48,638)
|
Proceeds from sale of
common stock, net of issuance costs
|
|
|
15,310,741
|
|
|
-
|
|
|
-
|
Refund of capital
contribution by a non-controlling shareholder
|
|
|
-
|
|
|
(200,000)
|
|
|
(29,080)
|
Capital contribution
by non-controlling shareholders
|
|
|
1,700,000
|
|
|
500,000
|
|
|
72,700
|
Net cash provided
by financing activities
|
|
|
24,535,764
|
|
|
996,994
|
|
|
144,964
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange
rate fluctuation on cash
|
|
|
67,620
|
|
|
1,195,329
|
|
|
173,802
|
|
|
|
|
|
|
|
|
|
|
Net increase
(decrease) in cash
|
|
|
4,461,660
|
|
|
(33,358,758)
|
|
|
(4,850,385)
|
Cash at beginning
of period
|
|
|
3,809,279
|
|
|
45,340,578
|
|
|
6,592,548
|
Cash at end of
period
|
|
Â¥
|
8,270,939
|
|
Â¥
|
11,981,820
|
|
$
|
1,742,163
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash
flow information
|
|
|
|
|
|
|
|
|
|
Cash paid during
the period for interest
|
|
Â¥
|
294,998
|
|
Â¥
|
805,613
|
|
$
|
117,137
|
Cash paid during
the period for taxes
|
|
Â¥
|
9,282
|
|
Â¥
|
2,002
|
|
$
|
291
|
|
|
|
|
|
|
|
|
|
|
Non-cash investing
and financing activities
|
|
|
|
|
|
|
|
|
|
Shares issued to
settle salary payable
|
|
Â¥
|
1,554,908
|
|
Â¥
|
-
|
|
$
|
-
|
Issuance of common
stock in exchange of shares of FGS , net of
issuance costs
|
|
|
-
|
|
|
21,433,796
|
|
|
-
|
Investment payable in
exchange of interest of FGS
|
|
Â¥
|
-
|
|
Â¥
|
6,400,000
|
|
$
|
930,564
|
Payable for
Construction in Progress
|
|
Â¥
|
2,712,518
|
|
Â¥
|
5,957,463
|
|
$
|
866,219
|
|
|
|
|
|
|
|
|
|
|
The accompanying
notes are an integral part of these unaudited condensed
consolidated financial statements
|
SOURCE Recon Technology, Ltd.