Slide 1: Corporate Presentation October 2014
Corporate Presentation October 2014 Recon Technology, Ltd. (Nasdaq: RCON) 1
Slide 2: Safe Harbor Statement
Safe Harbor Statement This document 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, underlying assumptions, and an
Slide 3: Company Overview
Company Overview 3
Slide 4: Company Overview
Stock Symbol RCON Stock Price ( 9/25/2014) $4.99 IPO 2009 Revenue (Fiscal Year 2014) $15.2 Million Long - term debt None Average Gross Margin in % 35.03% Shares Outstanding 4.7 M Market Cap. ( 9/25/2014) $23.58 M Directors & Officers Ownership 30% Fiscal Year End June 30th Auditors Friedman LLP Lega
Slide 5: Company Overview - Milestones
1999 2003 2004 2013 2011 2014 2009 Beijing BHD petroleum technology Ltd. was founded Nanjing Recon Technology Co.,Ltd. was founded N a njing Recon began implementation of "Digital Oilfield" for Sinopec's Jidong Oilfield. Recon was successfully listed on Nasdaq. First implementation of tie
Slide 6: Company Overview - Strong R&D Team
Company Overview - Strong R&D Team 29 Engineers 3 Professor Senior Engineers 8 Senior Engineers 40 + Technicians 8 Copyrights 25 Patents 6
Slide 7: Business Overview
Business Overview 7
Slide 8: Our Products & Services
Software Recon provides professional integrated solutions to oil and gas companies and their affiliates Hardware Services • Heating Furnace • Burner • Separators • Multiported - Valve • Process Automation Product • SCADA System • Expert System • Fracturing • Well Testing • Perforation Our Products &
Slide 9: Our Products & Services
Downhole Service: • Fracturing • Perforation • RTU • SCADA System • Furnace • Burner • Multiported valve • Separator • Furnace • Burner Our Products & Service s Our operation focused on the upstream of oil and gas industry chain 9
Slide 10: Our Products & Services - Our Clients
Primary Customers: CNPC SINOPEC Our Products & Service s - Our Clients We have a solid client base 10 Example: Xibei Oilfield: No. 1 Oil Production Plant No. 2 Oil Production Plant No. 3 Oil Production Plant Tuha oilfield branch Turpan oil production plant Luke ooze oil production plant Shanshan
Slide 11: Market - Oilfield Entry Permits
Market - Oilfield Entry Permits Strict industry access standards build a high entry barrier to competitors 11
Slide 12: Market - Company Characteristics
Higher Profit Margin Accurate Market Positioning Avoid Highly Competitive Products Focused on the Design and Applicability of Each Product 34.69% GP in FY 2014 12 Market - Company Characteristics Recon has good positioning strategy to support its development
Slide 13: Market - Brand
Automation System Automation System Fracturing Technology Burner Price Advantages Strategic Cooperation Market - Brand Distributor for Multinational Companies 13
Slide 14: Our Growth Strategies - Our Goals (Short-term)
20% Average Annual Internal Revenue Growth Expand product lines Geographic Expansion: Kazakhstan, Turkmenistan, Chad and Niger Double Size in 2 - 3 years Organic Growth Acquisitions Further Increase Margins Increase Service Maintain good relationships with customers. Our Growth Strategie
Slide 15: Our Growth Strategies - Business Strategies
Our Growth Strategies - Business Strategies Parternship with reputable international firms Enhance strategic cooperation with international market leader s Selectively seek acquisition opportunities Acquire oil/gas engineering manufacturers and/or automation products manufacturers and pursue ver
Slide 16: China's Growing Demand For Oil and Gas
Our Growth Strategies - Supporting Growth . China’s Growing Demand For Oil and Gas 16 Source: BP Energy Outlook 2035 Bloomburg
Slide 17: China's big two oil companies maintaining substantial E&P expenditures
Our Growth Strategies - Supporting Growth China ’ s big two oil companies are maintaining substantial expenditures in E&P 17
Slide 18: China's Continuing Overseas Investment in Oil and Gas
China ’ s Continuing Overseas Investment in Oil and Gas High automated technology and products instead of on - site laborers Long term good relationships with our customers • Our Advantages Our Growth Strategies - Supporting Growth 18
Slide 19: Our Growth Strategies - Positive Trends
Our Growth Strategies - Positive Trends Reform of China SEOs: Diversified Ownership --- More Opportunities for Private Companies, like RCON More Opportunities • Private Capital to sales unit • Distribution Business • Private Investment SINOPEC • Joint Cooperat ion • Jointly Develop Projects • Oil an
Slide 20: Financial Highlights
20 Financial Highlights
Slide 21: Financial Highlights - Key Financial Measures
Total Revenue Gross Profit Operating Expenses Net Income 0 1000 2000 3000 4000 5000 6000 2011FY 2012FY 2013FY 2014FY 3128 3810 4082 5267 (values in 000's USD ) -5000 -4000 -3000 -2000 -1000 0 1000 2011FY 2012FY 2013FY 2014FY -4492 -601 6.415 297 (values in 000's USD ) 0 1000 2000 3000 4000 5000 6000
Slide 22: Financial Highlights - Strong financial results in FY 2014
Financial Highlights Strong financial results in FY 2014 FY 2014 FY 2013 Percentage Revenues ( ‘ 000 USD ) ($1.00 = 6.1552 RMB) $ 15,182 $ 12,442 +22% Net income attributable to Recon Technology (U.S. GAAP, ‘ 000 USD) $ 6 $ 134 +1,933% Adjusted net income attributable to Recon Technology (non GAAP,
Slide 23: Financial Highlights - Gross Profit and Operating Expenses
Financial Highlights Gross Profit Operating Exp./ Income FY 2013 FY 2014 % Change Revenues (‘000 USD) $ 12,442 $ 15,182 +22% Cost of revenues $ 8,372 $ 9,915 +18.4% Gross profit $4,070 $ 5,267 +29.4% GP Margin (%) 32.71% 34.69% +2% Unit: ‘000 USD FY 2013 FY 2014 % Change Selling and distribution exp
Slide 24: Financial Highlights - Non-GAAP Reconciliation
Financial Highlights FY 2013 2014 Net income attributable to Recon Technology, Ltd $ 6,450 $ 131,140 Special items (A) : Change in fair value of warrants liability - (9,853) Loss from investment - 249,423 Restricted shares issued for consulting services - 66,219 Share - based compensation expense 30
Slide 25: Management Team
Management Team 25
Slide 26: Management Team
Yin, Shenpin Chairman and CEO Founder Responsible for overall strategies, planning, and business development 11 years of experience in automation industry Chen, Guangqiang Chief Technology Officer Founder Responsible for overall strategies, planning, and business development 27 years of
Slide 27: Summary of Investment Highlights
First & Foremost: Improve Safety, Improve Production, Reduce Costs China ’ s Continuing Demand for Energy No Manufacture: Low Fixed Cost + Bottom Line Improvement Continuing Expanding Product Line Geographic Expansion Shale Gas Opportunity: Fracturing Diversified Ownership Reform in China Potential
Slide 28: Contact Info
• China: • Liu Jia • Recon Technology, Ltd. • info@recon.cn • +86 (10) 84945799 • U.S. • Ken Donenfeld • DGI Investor Relations • kdonenfeld@dgiir.com • 1 - 212 - 425 - 5700 Contact Info 28