BEIJING, Nov. 14,
2022 /PRNewswire/ -- Recon Technology, Ltd
(NASDAQ: RCON) ("Recon" or the "Company") announced today an
update to investors and shareholders on questions posed about the
state of its business, challenges facing its business, its current
state of affairs and its plans for the future in a virtual meeting
held on November 10, 2022.
The Company previously issued a press release on November 4, 2022 about the virtual investor call
which included a question-and-answer portion for shareholders.
Questions were submitted to management ahead of the virtual
investor call and discussed during Thursday's call.
"I am grateful for our shareholders as the Company continues to
implement on our business efforts," said Shenpin Yin, Chairman and
CEO of Recon, "We know our shareholders have questions about the
state of our affairs, the state of the business, challenges facing
our business, and plans for the future."
The following questions and answers were discussed during the
virtual investor call:
1) Will the majority of Recon's revenue in the future consist of
upstream oilfield projects for large oil companies in
China?
Over the next three years, we anticipate that at least 80% of
the company's revenue will still come from oilfield or
oilfield-related customers, including equipment sales, automation
solutions, oilfield wastewater and sludge treatment services, etc.
We anticipate that the remaining revenue sources will mainly be
from maintenance services for refineries, etc. Beyond that, we
continue to explore new business opportunities around the energy
industry and our related customer base, such as our recently
disclosed peaking program to guide our customers to save money on
electricity. We also anticipate offering new and green energy-based
solutions to our customers based on our ongoing research and
development.
2) How many projects does Recon work on every year? Are more of
Recon's projects related to environmental services work? How many
different types of projects can Recon work on?
We don't categorize nor calculate the number of projects we work
on but report our revenue based on the number of our clients we
engage. We generate revenue by types of businesses through client
needs rather than by number of projects. For example, we may obtain
different orders, including equipment orders, different service
contracts, etc. from oilfield customers. These orders are obtained
in the course of servicing the customer and are not classified as
separate projects. Our revenues from oilfield environmental
business are stable at RMB20 million
(approximately $2.9 million) annually
and we expect to continue to grow based on the need of oilfield
companies for their continuous production and compliance with
China's environmental regulations.
We expect that there will be demand for sewage treatment and sludge
disposal. We expect to add hazardous waste content to our existing
operations to increase revenue streams and improve capacity
utilization of our disposal lines.
3) Can Recon provide an update on
plans to develop an integrate solar charging network business
line?
Due to the impact of the Covid-pandemic, we are currently unable
to deploy out the relevant equipment on a large scale, so the
company has suspended its plans to promote business. The
solar-based charging network business needs to be of a certain
scale, otherwise it will be difficult to achieve profitability and
satisfactory operating results.
4) Can Recon provide more details
on the current capabilities of the refueling mobile app? As an
investor, I am quite excited by the prospect of Future Gas
Station's future potential. I have been trying to follow this
development but unfortunately the DT Fueling station count
available on the my-dt website has been stuck at "1347" for the
past year. I imagine in the past year the amount of DT fueling
stations must have expanded substantially. Is there any information
you could give about the expansion of FGS and your outlook on this
as an important revenue stream for Recon? It is my understanding
that currently FGS revenue brings in roughly 500k-1M USD
annually but the upside here is substantially higher.
The FGS business continues and is currently generating revenues
of $1-1.5 million per year. You may
refer to our recently filed Form 20-F for more information. Due to
national policies that discourage the development of platform
companies, our customers have reservations about working with us;
therefore FGS' business expansion plans have been affected
negatively. We are trying new opportunities such as introducing new
business elements including carbon neutral solutions to provide new
value to our customers to achieve business breakthrough. We will
keep you updated on the progress of our business.
5) What are potential future changes in energy consumption in
China, and how can Recon help
customers with these changes?
We believe that in the next ten years, the traditional
petrochemical energy and new energy will co-exist and develop,
i.e., the oil industry and green energy will play different roles
in production and consumption segments and the proportion will be
different than that of today. We will continue to serve our
oilfield and gas station customers as these customers will still
exist, but they will also improve their products and businesses in
response to changes in the market's energy mix, and we believe that
as long as we execute our follow-on strategy, understand our
customers' needs and provide timely and quality services and
solutions, the company will benefit simultaneously.
6) What has the company done in last 8-12 months to
increase revenue or anything around safeguarding
investors. Are we on track for 20-30% increase in revenue from last
report or are there unforeseen circumstances? I know financials are
due next month/year so lot of people are looking forward for it.
What is the company doing now? Any new contracts? Changes in
business model?
We announced earlier this morning that Recon regained compliance
with Nasdaq's continued listing requirements today, which we
believe is a good start.
The company previously disclosed a 30% annual revenue growth
expectation, and overall, we believe this percentage is still
achievable. However, due to the impact of the epidemic and the
Chinese economy, we are cautiously adjusting this range to 20-30%.
We believe that, to protect the interests of investors, is to
continuously improve the company's operations and efficiency to
earn profits and increase the value of the Company. So in the short
term, we expect not spend the company's cash reserves or for share
buybacks. What we anticipate doing is investing cash in
business opportunities that will help the company earn stable cash
flow over the long term. We currently see a number of opportunities
and projects, but all of which are still under deliberative and
careful consideration and informed evaluations.
7) Clarify on what the company has done to ensure compliance
with PCAOB regulations.
Our auditor is now Marcum Asia due to a merger between Friedman
LLP and Marcum LLP, a firm that complies with all PCAOB regulations
and inspections, so we expect the PCAOB regulations on China-based public companies will not affect
Recon. We encourage you to review our Form 20-F and previous
filings on this issue.
8) What is the current cash position and is there need for any
dilution in near future? What do we plan to do with the raised
cash? Any acquisitions?
As of June 30, our cash were
$47 million. Please refer to our 20-F
on updated financials for current cash position and further
information.
One long-standing challenge which management has confronted has
been the small size of our single contract and the volatility of
our cash inflows, which affects our ability to make longer-term
operational decisions. Therefore, we believe management's primary
challenge now is to fundamentally change the cash flow
characteristics of the company.
These cash reserves are mainly used for potential mergers and
acquisitions. An important criterion for our selection of targets
is the ability to generate long-term stable cash flows and
reasonable profits to improve the company's risk tolerance and
increase the overall value of the company and for its shareholders.
We may raise capital, but this also depends on market conditions
and whether we have good investment targets.
The About Recon Technology, Ltd ("RCON")
Recon Technology, Ltd (NASDAQ: RCON) is the
People's Republic of
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 within several
segmented markets of the oil and gas filed service industry. RCON
also has developed stable long-term cooperation relationship with
its major clients. For additional information please
visit: http://www.recon.cn/.
Forward-Looking Statements
Recon includes "forward-looking statements" within the meaning
of the federal securities laws throughout this press release. A
reader can identify forward-looking statements because they are not
limited to historical fact or they use words such as "scheduled,"
"may," "will," "could," "should," "would," "expect," "believe,"
"anticipate," "project," "plan," "estimate," "forecast," "goal,"
"objective," "committed," "intend," "continue," or "will likely
result," and similar expressions that concern Recon's strategy,
plans, intentions or beliefs about future occurrences or results.
Forward-looking statements are subject to risks, uncertainties and
other factors that may change at any time and may cause actual
results to differ materially from those that Recon expected. Many
of these statements are derived from Recon's operating budgets and
forecasts, which are based on many detailed assumptions that Recon
believes are reasonable, or are based on various assumptions about
certain plans, activities or events which we expect will or may
occur in the future. However, it is very difficult to predict the
effect of known factors, and Recon cannot anticipate all factors
that could affect actual results that may be important to an
investor. All forward-looking information should be evaluated in
the context of these risks, uncertainties and other factors,
including those factors disclosed under "Risk Factors" in Recon's
most recent Annual Report on Form 20-F and any subsequent half-year
financial filings on Form 6-K filed with the Securities and
Exchange Commission. All forward-looking statements are qualified
in their entirety by the cautionary statements that Recon makes
from time to time in its SEC filings and public communications.
Recon cannot assure the reader that it will realize the results or
developments Recon anticipates, or, even if substantially realized,
that they will result in the consequences or affect Recon or its
operations in the way Recon expects. Forward-looking statements
speak only as of the date made. Recon undertakes no obligation to
update or revise any forward-looking statements to reflect events
or circumstances arising after the date on which they were made,
except as otherwise required by law. As a result of these risks and
uncertainties, readers are cautioned not to place undue reliance on
any forward-looking statements included herein or that may be made
elsewhere from time to time by, or on behalf of, Recon.
For more information, please contact:
At the Company
Ms. Liu Jia
Chief Financial Officer
Recon Technology, Ltd
Phone: +86 (10) 8494-5799
Email: info@recon.cn
Janice Wang
Wealth Financial Services LLC
Phone: +86 13811768599
+1 628 283 9214
Email: services@wealthfsllc.com
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SOURCE Recon Technology, Ltd