BEIJING, Nov 14, 2016 /PRNewswire/ --
Recon Technology (the "Company" or "Recon") (NASDAQ: RCON), ("Recon" or the "Company"), a leading independent oilfield services provider operating primarily in China, today reported its financial results for the first quarter of fiscal year 2017, which ended September 30, 2016.
Q1 FY2017 Financial Highlights:
* |
Courtesy foreign exchange rates are calculated based on RMB 6.6702: US$1.00. |
Mr. Shenping Yin, Chairman and CEO of Recon stated, "We continued to develop and expand our new oilfield waste management business this quarter. We are pleased with these results so far in fiscal 2017. And we look forward to expanding more business sectors and potential markets in the following quarters."
Q1 FY2017 Financial Results
For the Three Months Ended September 30, |
||||
(thousands) |
2015 RMB |
2016 RMB |
2016 USD |
% Change |
Revenues |
3,594 |
7,802 |
1,169 |
117.10% |
Hardware and software |
3,481 |
7,802 |
1,169 |
124.10% |
Service |
113 |
- |
- |
-100% |
Gross margin |
11.20% |
14% |
14% |
2.80% |
Net income (loss) attributable to RCON |
(8,849) |
(5,461) |
(818) |
38.30% |
Revenues
Revenues for the three months ended September 30, 2016 were RMB7.8 million ($1.2 million), an increase of RMB4.2 million or 117.1% from RMB3.6 million for the three months ended September 30, 2015. The overall increase in revenue was mainly caused by our increased hardware and software revenue. In particular, (a) revenue from automation products and embedded software increased slightly to RMB2.1 million; (b) revenues from equipment and accessories increased by RMB2.3 million, or 160.5%, to RMB3.8 million for the three months ended September 30, 2016, as compared to RMB1.5 million for the same period of last fiscal year; and (c) as of first quarter of fiscal year 2017, the new oilfield waste water treatment products segment contributed RMB1.9 million revenue to our operations.
Gross Profit and Gross Margin
Cost of revenues increased from RMB3.2 million in the three months ended September 30, 2015 to RMB6.7 million ($1.0 million) for the same period in 2016, an increase of approximately RMB3.5 million ($0.5 million), or 110.2%.
Gross profit increased to approximately RMB1.1 million ($0.2 million) for the three months ended September 30, 2016 from approximately RMB0.4 million for the same period in 2015. Gross profit as a percentage of revenue increased to 14.0% for the three months ended September 30, 2016 from 11.2% for the same period in 2015.
Operating Loss and Operating Loss Margin
Selling expenses decreased approximately RMB62.5 thousand ($9.4 thousand) for the three months ended September 30, 2016 compared to the same period in 2015. General and administrative expenses increased by 20.5% or RMB0.8 million ($0.1 million), from RMB4.1 million in the three months ended September 30, 2015 to RMB4.9 million ($0.7 million) in the same period of 2016. Research and development expenses decreased from approximately RMB1.8 million for three months ended September 30, 2015 to approximately RMB0.6 million ($0.1 million) for the same period of 2016. Total operating expenses decreased by RMB2.5 million, or 27.6%, to RMB6.6 million ($1.0 million) for the three months ended September 30, 2016 from RMB9.08 million for the same period during last fiscal year.
Operating loss was approximately RMB5.5 million ($0.8 million) for the three months ended September 30, 2016, compared to a loss of RMB8.7 million for the same period of 2015.
Net Loss
Net loss and net loss attributable to ordinary shareholders for the three months ended September 30, 2016 was RMB5.5 million ($0.8 million), or RMB0.92 ($0.14) per diluted share, compared to RMB8.85 million, or RMB1.63 ($0.26) per diluted share, for the same period last fiscal year.
Financial Position
As of September 30, 2016, the Company had cash and cash equivalents of RMB0.6 million ($0.08 million), and short-term borrowings from related parties of RMB12.5 million ($1.9 million), compared to RMB3.9 million and RMB9.4 million, respectively, for the same period last fiscal year. Working capital as of September 30, 2016 was RMB41.2 million ($6.2 million) as compared to RMB66.5 million at September 30, 2015. Net cash used in operating activities was RMB0.3 million ($0.05 million) for the three months ended September 30, 2016, compared to RMB1.0 million for the same period of last fiscal year. Net cash used in investing activities was RMB22.3 thousand ($3.3 thousand) for the three months ended September 30, 2016, compared to RMB0.5 million for the same period of last fiscal year. Net cash used in financing activities was RMB1.0 million ($0.1 million) for the three months ended September 30, 2016, compared to RMB7.1 million ($1.1 million) for the same period last fiscal year.
Recent Developments
As of the first quarter of fiscal year 2017, the Company has achieved remarkable achievement in its oilfield waste water treatment segment. In January 2016, the Company announced its cooperation with Qinghai Oilfield Company, signing an agreement to sell the oilfield RMB3.98 million of related products and services. For the three months period ended September 30, 2016, the Company has completed this agreement and continues to expand markets in the environmental protection industry, including oilfield water treatment and other industrial and sewage disposal projects.
The Company has also developed new clients China's top producing Changqing Oilfield, which is located in China's Xi'an Province.
About Recon
Recon Technology, Ltd. is China's first listed non-state owned oil and gas field service company on Nasdaq (RCON). Recon supplies China's largest oil exploration companies, Sinopec 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 us at www.recon.cn.
Safe Harbor
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 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.
Company Contact
Liu Jia
Recon Technology, Ltd.
+86 (10) 84945799
info@recon.cn
RECON TECHNOLOGY, LTD |
|||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||
(UNAUDITED) |
|||||
As of |
As of |
As of |
|||
2016 |
2016 |
2016 |
|||
ASSETS |
RMB |
RMB |
U.S. Dollars |
||
Current assets |
|||||
Cash |
1,817,620 |
554,630 |
83,150 |
||
Notes receivable |
4,660,177 |
3,105,770 |
465,617 |
||
Trade accounts receivable, net |
38,097,626 |
37,267,708 |
5,587,178 |
||
Inventories, net |
6,313,070 |
6,339,234 |
950,379 |
||
Other receivables, net |
22,000,112 |
20,101,962 |
3,013,688 |
||
Purchase advances, net |
1,323,305 |
4,000,124 |
599,699 |
||
Prepaid expenses |
110,310 |
55,260 |
8,285 |
||
Total current assets |
74,322,220 |
71,424,688 |
10,707,996 |
||
Property and equipment, net |
2,907,762 |
2,723,363 |
408,287 |
||
Long-term trade accounts receivable, net |
2,220,332 |
2,220,332 |
332,872 |
||
Total Assets |
79,450,314 |
76,368,383 |
11,449,155 |
||
Current liabilities |
|||||
Trade accounts payable |
7,540,430 |
9,267,662 |
1,389,409 |
||
Other payables |
2,972,192 |
2,787,443 |
417,894 |
||
Other payable- related parties |
3,680,244 |
3,712,698 |
556,608 |
||
Deferred revenue |
406,681 |
231,187 |
34,660 |
||
Advances from customers |
200,600 |
200,100 |
29,999 |
||
Accrued payroll and employees' welfare |
381,109 |
499,155 |
74,833 |
||
Accrued expenses |
261,348 |
193,274 |
28,974 |
||
Taxes payable |
755,880 |
683,148 |
102,418 |
||
Short-term borrowings |
530,000 |
- |
- |
||
Short-term borrowings - related parties |
12,941,848 |
12,515,253 |
1,876,288 |
||
Deferred tax liability |
180,186 |
180,186 |
27,014 |
||
Total current liabilities |
29,850,518 |
30,270,106 |
4,538,097 |
||
Equity |
|||||
Common stock, ($ 0.0185 U.S. dollar par value, 100,000,000 shares authorized; 5,804,005 and 5,980,792 shares issued and outstanding as of June 30, 2016 and September 30, 2016, respectively) |
|||||
741,467 |
763,340 |
114,440 |
|||
Additional paid-in capital |
100,612,455 |
102,557,249 |
15,375,392 |
||
Statutory reserve |
4,148,929 |
4,148,929 |
622,008 |
||
Accumulated deficits |
(63,907,512) |
(69,368,096) |
(10,399,671) |
||
Accumulated other comprehensive loss |
(219,040) |
(226,642) |
(33,978) |
||
Total shareholders' equity |
41,376,299 |
37,874,780 |
5,678,191 |
||
Non-controlling interest |
8,223,497 |
8,223,497 |
1,232,867 |
||
Total equity |
49,599,796 |
46,098,277 |
6,911,058 |
||
Total Liabilities and Equity |
79,450,314 |
76,368,383 |
11,449,155 |
||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements |
|||||
RECON TECHNOLOGY, LTD |
|||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS |
|||||
(UNAUDITED) |
|||||
For the three months ended |
|||||
September 30, |
|||||
2015 |
2016 |
2016 |
|||
RMB |
RMB |
USD |
|||
Revenues |
|||||
Hardware and software |
3,480,752 |
7,802,103 |
1,169,692 |
||
Service |
113,208 |
- |
- |
||
Total revenues |
3,593,960 |
7,802,103 |
1,169,692 |
||
Cost of revenues |
|||||
Hardware and software |
3,315,627 |
6,447,643 |
966,632 |
||
Provision for (reversal of) slow moving inventories |
(123,332) |
262,135 |
39,299 |
||
Total cost of revenues |
3,192,295 |
6,709,778 |
1,005,931 |
||
Gross profit |
401,665 |
1,092,325 |
163,761 |
||
Selling and distribution expenses |
1,112,670 |
1,050,141 |
157,437 |
||
General and administrative expenses |
4,067,219 |
4,899,328 |
734,508 |
||
Provision for doubtful accounts |
2,109,926 |
8,026 |
1,203 |
||
Research and development expenses |
1,792,997 |
618,674 |
92,752 |
||
Operating expenses |
9,082,812 |
6,576,169 |
985,900 |
||
Loss from operations |
(8,681,147) |
(5,483,844) |
(822,139) |
||
Other income (expenses) |
|||||
Subsidy income |
49,000 |
7,807 |
1,170 |
||
Interest income |
55,510 |
27,894 |
4,182 |
||
Interest expense |
(277,824) |
(132,490) |
(19,863) |
||
Income (loss) from foreign currency exchange |
(938) |
388 |
58 |
||
Other income (expense) |
(9,664) |
99,518 |
14,920 |
||
Other income (expense) |
(183,916) |
3,117 |
467 |
||
Loss before income tax |
(8,865,063) |
(5,480,727) |
(821,672) |
||
Benefit for income tax |
(16,457) |
(20,143) |
(3,020) |
||
Net loss |
(8,848,606) |
(5,460,584) |
(818,652) |
||
Comprehensive loss |
|||||
Net loss |
(8,848,606) |
(5,460,584) |
(818,652) |
||
Foreign currency translation adjustment |
124,218 |
(7,602) |
(1,140) |
||
Comprehensive loss |
(8,724,388) |
(5,468,186) |
(819,792) |
||
Less: Comprehensive loss attributable to non-controlling interest |
16,620 |
- |
- |
||
Comprehensive loss attributable to Recon Technology, Ltd |
(8,741,008) |
(5,468,186) |
(819,792) |
||
Loss per common share - basic and diluted |
(1.63) |
(0.92) |
(0.14) |
||
Weighted - average shares -basic and diluted |
5,438,763 |
5,957,733 |
5,957,733 |
||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements |
|||||
RECON TECHNOLOGY, LTD |
|||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||
(UNAUDITED) |
|||||
For the three months ended September 30, |
|||||
2015 |
2016 |
2016 |
|||
RMB |
RMB |
U.S. Dollars |
|||
Cash flows from operating activities: |
|||||
Net loss |
(8,848,606) |
(5,460,584) |
(818,652) |
||
Adjustments to reconcile net loss to net cash used in operating activities: |
|||||
Depreciation |
259,768 |
205,580 |
30,821 |
||
Gain from disposal of equipment |
- |
(35,919) |
(5,385) |
||
Provision for doubtful accounts |
2,109,926 |
8,026 |
1,203 |
||
Provision for (reversal of) slow moving inventories |
(123,332) |
262,135 |
39,299 |
||
Share based compensation |
1,126,552 |
1,966,670 |
294,843 |
||
Deferred tax benefit |
(16,458) |
- |
- |
||
Restricted shares issued for services |
202,475 |
- |
- |
||
Changes in operating assets and liabilities: |
|||||
Notes receivable |
977,950 |
1,554,407 |
233,037 |
||
Trade accounts receivable |
1,685,745 |
1,035,863 |
155,297 |
||
Trade accounts receivable-related parties |
4,569,800 |
- |
- |
||
Inventories |
(908,544) |
(288,299) |
(43,222) |
||
Other receivable, net |
(419,821) |
1,866,616 |
279,843 |
||
Other receivables-related parties, net |
91,021 |
- |
- |
||
Purchase advance, net |
(847,071) |
(2,873,141) |
(430,742) |
||
Purchase advance-related parties, net |
394,034 |
- |
- |
||
Prepaid expense |
216,619 |
55,050 |
8,253 |
||
Prepaid expense - related parties, net |
210,000 |
- |
- |
||
Trade accounts payable |
(217,263) |
1,727,232 |
258,947 |
||
Trade accounts payable-related parties |
(254,826) |
- |
- |
||
Other payables |
(308,852) |
(184,749) |
(27,698) |
||
Other payables-related parties |
(2,465,074) |
32,454 |
4,866 |
||
Deferred revenue |
166,982 |
(175,494) |
(26,310) |
||
Advances from customers |
(158,716) |
(500) |
(75) |
||
Accrued payroll and employees' welfare |
83,268 |
118,046 |
17,697 |
||
Accrued expenses |
(7,505) |
(56,539) |
(8,476) |
||
Taxes payable |
1,507,434 |
(80,273) |
(12,035) |
||
Net cash used in operating activities |
(974,494) |
(323,419) |
(48,489) |
||
Cash flows from investing activities: |
|||||
Purchase of property and equipment |
(470,265) |
(29,621) |
(4,441) |
||
Proceeds from disposal of equipment |
- |
51,900 |
7,781 |
||
Net cash provided by (used in) investing activities |
(470,265) |
22,279 |
3,340 |
||
Cash flows from financing activities: |
|||||
Repayment of short-term borrowings |
- |
(530,000) |
(79,458) |
||
Proceeds from short-term borrowings-related parties |
1,800,000 |
4,838,318 |
725,361 |
||
Repayment of short-term borrowings-related parties |
(9,100,000) |
(5,276,448) |
(791,046) |
||
Proceeds from sale of common stock, net of issuance costs |
165,823 |
- |
- |
||
Net cash used in financing activities |
(7,134,177) |
(968,130) |
(145,143) |
||
Effect of exchange rate fluctuation on cash and cash equivalents |
111,279 |
6,280 |
943 |
||
Net decrease in cash |
(8,467,657) |
(1,262,990) |
(189,349) |
||
Cash at beginning of period |
12,344,929 |
1,817,620 |
272,498 |
||
Cash at end of period |
3,877,272 |
554,630 |
83,149 |
||
Supplemental cash flow information |
|||||
Cash paid during the period for interest |
277,824 |
167,403 |
25,097 |
||
Cash paid during the period for taxes |
72,217 |
- |
- |
||
Non-cash investing and financing activities |
|||||
AR and short-term borrowings-related parties offset |
200,000 |
- |
- |
||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements |
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