BEIJING, Nov. 17, 2010 /PRNewswire-Asia/ -- Recon Technology, Ltd. (Nasdaq: RCON) ("Recon" or the "Company"), a leading Chinese non-state-owned oil field services provider to oil and gas companies and their affiliates, has announced its financial results for the first fiscal quarter ended September 30, 2010. Summary financial data is provided below:
First Quarter Fiscal 2011 Financial Highlights
Shenping Yin, Recon's Chief Executive Officer, stated, "Net income nearly doubled during the first fiscal quarter, and our margins improved significantly. During the first quarter, which is traditionally our weakest sales quarter due to our clients' budgeting and planning cycles, we focused on executing a number of key projects in our considerable sales backlog. We expect a rebound in sales over the next few quarters as these projects are completed."
Mr. Yin continued, "The International Energy Agency recently projected that China will account for nearly half of the net growth in global oil demand through 2035. Additionally, the recent gas shortage in China highlighted the need for domestic natural gas providers to increase their production output to meet the nation's growing energy needs. We believe that large domestic oil and gas companies will need to upgrade their equipment and technology in the years ahead to remain competitive in their respective industries. Our strong working relationship with China's largest oil and gas providers, combined with our extensive industry expertise, gives us a major strategic advantage and positions us for continued growth in China's oilfield services market."
First Quarter Fiscal 2011 Results of Operations
Revenues
Revenues for the three months ended September 30, 2010 were $3,254,551 as compared to $3,354,921 for the three months ended September 30, 2009. The slight decrease of $100,370, or 3.0%, was primarily due to seasonality as well as the Company's continued execution of key projects in its sales backlog, which are expected to generate revenues upon their completion.
Gross Profit
Gross profit for the three months ended September 30, 2010 was $1,152,239 as compared to $955,353 for the three months ended September 30, 2009. The increase of $196,886, or 20.6%, was primarily due to an emphasis on higher-margin projects. Costs of sales for the three-month period were $2,102,312 as compared to $2,399,568 for the same period a year ago. The Company's gross margin was 35.4% and 10.6%, for the three months ended September 30, 2010 and 2009, respectively.
Income from Operations
Operating income for the three months ended September 30, 2010 amounted to $252,735 as compared to $193,217 for the three months ended September 30, 2009. The increase of $59,518 was primarily due to an emphasis on higher-margin projects. Operating expenses for the three-month period totaled $899,504 as compared to $762,137 for the same period a year ago.
Net Income
Net income for the three months ended September 30, 2010 was $125,969 as compared to $63,364 for the three months ended September 30, 2009, due to the reasons set forth above. Earnings per diluted share were $0.03 for the quarter, compared with diluted EPS of $0.02 for the same period a year ago.
Liquidity and Capital Resources
As of September 30, 2010, the Company's current assets were $25.8 million and current liabilities were $7.9 million. Cash and cash equivalents totaled $1.5 million as of September 30, 2010. The Company's shareholders' equity at September 30, 2010 was $26.0 million. The Company used $2,883 in cash for operating activities during the three months ended September 30, 2010, compared to cash provided by operating activities of $83,410 for the three months ended September 30, 2009. The Company used $991 in cash for investing activities during the three months ended September 30, 2010, compared to $11,321 for the three months ended September 30, 2009. The Company used $340,139 in cash for financing activities during the three months ended September 30, 2010, compared to cash provided by financing activities of $8,505,179 for the three months ended September 30, 2009.
Shareholder Meeting
Recon will hold its 2010 Annual Meeting of Shareholders on Wednesday, December 1, 2010, at 9:00 a.m. (Beijing time). The meeting will be held in Room 1801 of the King Long International Mansion, located at No. 9 Fulin Road, Beijing, P.R. China. Shareholders may also access the annual meeting via conference call. Instructions for accessing the call will be available on the Company's website at http://www.recon.cn.
About Recon Technology, Ltd.
Recon Technology, Ltd. has been providing leading Chinese oil and gas companies with automation services that increase efficiency and profitability in exploring, extracting, producing, processing, refining and transporting petroleum products for over 10 years. The company's proprietary computerized process control system manages oil production in real-time to increase extraction levels, reduce impurities in extracted petroleum and lower production costs. In addition, as one of only two acoustic system providers in the world, Recon's acoustic pipeline monitoring system is widely used to prevent gas leakage in the transport pipeline. Recon's technology is based on three software copyrights, eight product patents and four pending patents. Recon Technology is the first Chinese non-state-owned oil and gas service company to go public in the U.S.
More information may be found at http://www.recon.cn or via e-mail at info@recon.cn.
Forward-Looking Statements
This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in reports field 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.
RECON TECHNOLOGY, LTD |
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CONSOLIDATED STATEMENTS OF BALANCE SHEETS |
||||||
September 30, |
June 30, |
|||||
2010 |
2010 |
|||||
ASSETS |
U.S. Dollars |
U.S. Dollars |
||||
Current assets |
(Unaudited) |
|||||
Cash and cash equivalents |
$ |
1,464,275 |
$ |
1,812,896 |
||
Trade accounts receivable, net of allowance for doubtful accounts of RMB1,089,331 and RMB1,449,453($216,398), respectively |
12,309,366 |
13,350,949 |
||||
Other receivables, net of allowance for doubtful accounts of RMB1,089,331 and RMB96,527($14,411) respectively |
2,381,945 |
1,918,536 |
||||
Purchase advances |
5,710,021 |
6,949,941 |
||||
Prepaid expenses |
124,917 |
114,456 |
||||
Inventories |
3,728,662 |
1,963,379 |
||||
Deferred tax assets |
34,847 |
41,200 |
||||
25,754,033 |
26,151,357 |
|||||
Property and equipment, net of accumulated depreciation of RMB1,190,970 and RMB1,289,567($192,527), respectively |
207,659 |
221,388 |
||||
$ |
25,961,692 |
$ |
26,372,745 |
|||
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||||
Current liabilities |
||||||
Trade accounts payable |
$ |
2,221,678 |
$ |
2,468,879 |
||
Other payables |
500,330 |
462,267 |
||||
Deferred income |
553,763 |
637,152 |
||||
Advances from customers |
24,979 |
65,655 |
||||
Accrued payroll and employees' welfare |
39,697 |
53,827 |
||||
Accrued expenses |
48,968 |
43,416 |
||||
Taxes payable |
2,780,612 |
3,016,244 |
||||
Short-term notes payable |
887,547 |
750,195 |
||||
Short-term notes payable-related parties |
875,517 |
1,096,349 |
||||
Total current liabilities |
7,933,091 |
8,593,984 |
||||
Total Liabilities |
7,933,091 |
8,593,984 |
||||
Commitments and Contingencies |
||||||
Shareholders' equity |
||||||
Common shares, $0.0185 U.S. dollar par value, 25,000,000 shares authorized; 3,951,811 and 3,951,811 shares issued and outstanding at June 30 and September 30, 2010 |
79,124 |
79,124 |
||||
Additional paid-in capital |
10,405,803 |
10,339,812 |
||||
Appropriated retained earnings |
560,682 |
560,682 |
||||
Unappropriated retained earnings |
5,516,204 |
5,379,809 |
||||
Accumulated other comprehensive loss |
(16,129) |
(11,495) |
||||
Total controlling shareholders' equity |
16,545,684 |
16,347,932 |
||||
Non-controlling interest, net of tax |
1,482,917 |
1,430,830 |
||||
Total equity |
18,028,601 |
17,778,762 |
||||
Total Liabilities and Equity |
$ |
25,961,692 |
$ |
26,372,745 |
||
RECON TECHNOLOGY, LTD |
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CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME |
||||||
For the Three Months Ended Sep. 30 |
||||||
2010 |
2009 |
|||||
U.S. Dollars |
U.S. Dollars |
|||||
(Unaudited) |
(Unaudited) |
|||||
Revenues |
||||||
Hardware |
$ |
3,254,551 |
$ |
2,877,181 |
||
Service |
- |
443,926 |
||||
Software |
- |
33,815 |
||||
Total revenues |
3,254,551 |
3,354,921 |
||||
Cost of revenues |
2,102,312 |
2,399,568 |
||||
Gross margin |
1,152,239 |
955,353 |
||||
Selling and distribution expenses |
269,204 |
322,362 |
||||
General and administrative expenses |
630,300 |
439,775 |
||||
Operating expenses |
899,504 |
762,137 |
||||
Income from operations |
252,735 |
193,217 |
||||
Other income (expenses) |
||||||
Subsidy income |
67,410 |
3,930 |
||||
Interest income |
207 |
250 |
||||
Interest expense |
(16,936) |
(6,158) |
||||
Other income (expenses) |
(6,330) |
10,969 |
||||
44,351 |
8,992 |
|||||
Income before income taxes and non-controlling interest |
297,086 |
202,209 |
||||
Provision for income taxes |
(120,307) |
(103,414) |
||||
Net income before allocation to non-controlling interests |
176,779 |
98,794 |
||||
Less: Net income attributable to non-controlling interest |
(50,810) |
(35,430) |
||||
Net income attributable to common shareholders |
125,969 |
63,364 |
||||
Comprehensive income |
||||||
Net income before allocation to non-controlling interests |
176,779 |
98,794 |
||||
Foreign currency translation adjustment |
(16,129) |
(7,730) |
||||
Comprehensive income |
160,650 |
91,065 |
||||
Comprehensive income attributable to non-controlling interests |
(49,197) |
(34,657) |
||||
Comprehensive income attributable to common shareholders |
$ |
111,453 |
$ |
56,407 |
||
Earnings per common share - basic |
||||||
Net income attributable to common shareholders |
$ |
0.03 |
$ |
0.02 |
||
Earnings per common share - diluted |
||||||
Net income attributable to common shareholders |
$ |
0.03 |
$ |
0.02 |
||
Weighted - average shares -basic |
3,951,811 |
3,360,743 |
||||
Weighted - average shares -diluted |
3,951,811 |
3,457,394 |
||||
RECON TECHNOLOGY, LTD. |
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CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||
For the Three Months Ended Sep. 30 |
||||||
2010 |
2009 |
|||||
U.S. Dollars |
U.S. Dollars |
|||||
(Unaudited) |
(Unaudited) |
|||||
Cash flows from operating activities: |
||||||
Net income before allocation to noncontrolling interests |
$ |
176,780 |
$ |
98,794 |
||
Adjustments to reconcile net income before noncontrolling interests to net cash |
||||||
provided by operating activities: |
||||||
Depreciation |
14,720 |
12,403 |
||||
Stock-based payment |
65,497 |
43,994 |
||||
Movement of deferred taxation |
6,353 |
(111,646) |
||||
Changes in operating assets and liabilities: |
||||||
Trade accounts receivable, net |
1,041,582 |
(847,481) |
||||
Trade accounts receivable-related parties, net |
- |
75,063 |
||||
Other receivables, net |
(206,750) |
(143,584) |
||||
Other receivables related parties, net |
- |
(34,510) |
||||
Purchase advance, net |
1,252,089 |
438,175 |
||||
Prepaid expense |
(10,461) |
(157,044) |
||||
Inventories |
(1,765,283) |
(530,379) |
||||
Trade accounts payable |
(247,201) |
809,426 |
||||
Trade accounts payable-related parties |
- |
2,110 |
||||
Other payables |
38,063 |
41,344 |
||||
Deferred income |
(83,390) |
199,338 |
||||
Advances from customers |
(40,675) |
(36,399) |
||||
Accrued payroll and employees' welfare |
(14,130) |
(10,622) |
||||
Accrued expenses |
5,552 |
1,790 |
||||
Taxes payable |
(235,628) |
232,638 |
||||
Net cash provided by (used in) operating activities |
(2,883) |
83,410 |
||||
Cash flows from investing activities: |
||||||
Purchases of property and equipment |
(991) |
(11,321) |
||||
Net cash used in investing activities |
(991) |
(11,321) |
||||
- |
||||||
Cash flows from financing activities: |
- |
|||||
Proceeds from stock issuance |
- |
8,988,976 |
||||
Proceeds from short-term notes payable |
137,352 |
(186,835) |
||||
Repayment for short-term notes payable-related party |
(220,832) |
(296,962) |
||||
Loan to third-party companies |
(256,659) |
- |
||||
Net cash provided by (used in) financing activities |
(340,139) |
8,505,179 |
||||
- |
||||||
Effect of exchange rate fluctuation on cash and cash equivalents |
(4,608) |
(7,730) |
||||
- |
||||||
Net increase (decrease) in cash and cash equivalents |
(348,621) |
8,569,538 |
||||
Cash and cash equivalents at beginning of period |
1,812,896 |
407,240 |
||||
Cash and cash equivalents at end of period |
$ |
1,464,275 |
$ |
8,976,778 |
||
Supplemental cash flow information |
||||||
Cash paid during the period for interest |
2,687 |
- |
||||
Cash paid during the period for taxes |
$ |
242,729 |
$ |
7,420 |
||
This information is intended to be reviewed in conjunction with the Company's filings with the Securities and Exchange Commission, which includes the accompanying notes.
Contact: |
|
At the Company: |
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Recon Technology, Ltd |
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Tel: +86-10-8494-5799 |
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Email: info@recon.cn |
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Investor Relations: |
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Dave Gentry, U.S. |
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RedChip Companies, Inc. |
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Tel: +1-800-733-2447, Ext. 104 |
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Email: info@redchip.com |
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Jing Zhang, China |
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RedChip Beijing Representative Office |
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Tel: +86 10-8591-0635 |
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