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Recon Technology Revenue and Profit Growth Continue at Double Digit Rate. Q3'10 Revenue Up 111%, Net Income Up 50%

Strong Results Reflect Continued Business Expansion


05/18/10

Beijing, China – May 18, 2010Recon Technology, Ltd. (Nasdaq: RCON), a leading Chinese non-state-owned oil field services provider, today reported financial results for its FY ’10 third quarter ended March 31, 2010.

Q3 FY ‘10 Highlights
  • Revenue increased 111.2% to $3.85 million from $1.82 million in Q3 FY ’09 due to the rapid development of our core business and expansion into a new market.
  • Gross profit increased 96.5% to $1.72 million for Q3 FY ‘10 from $0.87 million in Q3 FY ‘09.
  • Income from operations rose 75.6% to $1.01 million compared with $0.57 million in Q3 FY ‘09 due to an increase in sales.
  • Net income available for common shareholders was $0.66 million, an increase of 50.1% from the same period of 2009.
  • Diluted EPS was $0.17, compared to $0.20 per diluted share in Q3 FY ’09, reflecting an increase in shares issued associated with the company’s 2009 IPO.
  • Gross margin was 44.7%, compared to 48.0% in Q3 FY ’09
  • Weighted average number of diluted shares outstanding was 4 million, compared to 2.25 million in Q3 FY ‘09.

  • First Nine Months FY ‘10 Highlights
  • Revenue was $14.46 million, an increase of 59.0% over $9.09 million for the nine months ended March 31, 2009.
  • Gross profit increased 74.4% to $6.26 million vs. $3.59 million for the same period in 2009
  • Gross margin increased to 43.3% for the nine months ended March 31, 2010 from 39.5% for the nine months ended March 31, 2009.
  • Income from operations was $3.73 million, a gain of 59.8% from $2.33 million for the same period in 2009, primarily attributable to the increase in sales.
  • Net income available for common shareholders was $2.56 million, an increase of 42.5% over the first nine months of FY ‘09.
  • Diluted EPS was $0.68, compared to $0.80 per diluted share for the first nine months of FY ‘09, reflecting an increase in shares issued associated with the company’s 2009 IPO.
  • Weighted average number of diluted shares outstanding was 3.76 million, compared to 2.25 million for the nine months ended March 31, 2009.


  • Liquidity and Capital Resources
    The company’s cash balance on March 31, 2010 was approximately $3.26 million. Recon had short-term debt to its internal management team of $1.1 million and no outside or long-term debt. Working capital was $16.6 million. Controlling stockholders' equity totaled $15.5 million. The current ratio was 3.06, up from 1.90 on June 30, 2009. Net cash provided in financing activities totaled $9.0 million for the nine months ended March 31, 2010, which included the debt from the management team to supplement working capital and from the Company’s IPO on July 30, 2009.

    Management Commentary
    Shenping Yin, Recon's Chief Executive Officer, said, "I am very pleased to see continued growth of our business. It is a strong credential of our capability to serve the increasingly sophisticated demand of our clients and to expand to new market area.”

    “Rising energy demand associated with China’s continued economic growth, government initiatives to increase safety and security in the Chinese energy industry and focus by oil and gas field operators for digital operation are all positive indicators for Chinese oil field service providers,” commented Mr. Yin.

    “I am also happy to see the new 36 Guidelines issued on May 13th by Chinese State Council to expand market access for private investment in the monopolized sectors including upstream oil and gas exploration (Chinese version government document available at http://www.gov.cn/zwgk/2010-05/13/content_1605218.htm I believe we are well-positioned to leverage our industry expertise and established business relationships to identify and capitalize on the growth opportunities,” concluded Mr. Yin.

    The financial statements follow.

    About Recon Technology, Ltd.
    Recon Technology, Ltd is a non-state-owned oil field service company in China. The company provides services designed to automate the extraction of petroleum for Chinese oil and gas fields. The company has developed software and hardware to manage the oil extraction process in real-time. More information may be found at http://www.recon.cn or e-mail: recon@hawkassociates.com.

    Recon's online investor kit, including an investment profile, press releases, current price quotes, stock charts and more is available at http://www.hawkassociates.com/profile/rcon.cfm. To receive notification of future releases via e-mail, subscribe at http://www.hawkassociates.com/about/alert/.

    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.
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    Investor Contact:
    In USA
    Hawk Associates
    Julie Marshall
    Frank Hawkins
    305-451-1888
    recon@hawkassociates.com

    In China
    Recon Technology Ltd
    Peggy Yuan
    Investor Relations
    +8610 8494 5799
    yuan.peggie@gmail.com


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    RECON TECHNOLOGY, LTD CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


    RECON TECHNOLOGY, LTD CONSOLIDATED FINANCIAL STATEMENTS OF CASH FLOW




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