Recon Technology, Ltd Reports Financial Results for Fiscal Year 2021

About this update from Recon Technology, Ltd.

BEIJING , Nov. 15, 2021 /PRNewswire/ -- Recon Technology, Ltd. (Nasdaq: RCON) ("Recon" or the "Company"), a China -based independent solutions integrator in the oilfield service and environmental protection, electric power and coal chemical industries, today announced its financial results for fiscal year 2021. Fiscal 2021 Financial Highlights: Total revenues for fiscal year 2021 decreased by 27.1% to $7.4 million (¥ 47.9 million). Total cost of revenues for fiscal year 2021 decreased by 11.8% to $6.3 million (¥40.7 million). Gross profit for fiscal year 2021 was $1.1 million (¥7.2 million). Gross profit margin for fiscal year 2021 was 15.1%, a decrease of 14.7 percentage points compared to fiscal year 2020. Net loss attributable to Recon for fiscal year 2021 was $3.5 million (¥22.8 million), or $0.28 (¥1.80) per basic and diluted share, compared to ¥19.2 million, or ¥4.16 per basic and diluted share for the fiscal year 2020. Management Commentary Mr. Shenping Yin , co-founder and CEO of Recon, stated, "Fiscal 2021 has been a very challenging year for us. The impact of the COVID-19 pandemic hammered the oil industry in 2020, forcing oil companies in China to stay prudent with their investment and capitalization expenditures from July 2020 to early 2021. Thus, as some of our strong businesses remain under pressure to recover, we needed to adopt some temporary low price strategy to maintain partnerships with our clients which we believe will continue to bring high value to us in the long term. Nevertheless, we are pleased to see the treatment of waste water and oily sludge business segments perform well, which proves our investments on these sectors as worthwhile. We successfully developed some new customized equipment that matched other oilfields' clients requirements and opened new markets. As the oil industry faced headwinds in 2021 and the years ahead, management are confident on the coming year's performance and believe that we will regain our advantages in all business segments." Mr. Yin continued, "During this year, we also made some strategic decisions. On the one hand, the new energy market under the carbon peak and carbon neutral target bring new opportunities to all industries in China , and it also holds true in the oil industry. The overall energy utilization rate of China's oil fields is low due to their current power supply system and geographical distribution of oil wells. To this end, we have launched a solar-powered solution through cooperation with oil fields with introducing the application of blockchain technology in the distributed energy industry, and providing our oilfield customers with a practical solution to support their carbon peaking and carbon neutral actions. We have conducted trials on some oil wells in Changqing Oilfield , and the results so far mark our system solution as successful in helping our customers achieve a 78% reduction in CO2 emissions and over 20% energy savings. We will continue to invest resources in this trend and enhance our cooperation with our blockchain technology partners to improve our solution and expand the market to more oilfields and gas stations. On the other hand, we acquired a majority equity interest of FGS as we see in the trend of digitalization and intelligence utilization in gas stations in China . Although these strategic investments are subject to certain uncertainty, management believe it's a worthy try and will bring a long term benefit for the best interest of the Company." Fiscal 2021 Financial Results: Revenue Total revenues were approximately ¥47.9 million ( $7.4 million ), representing a decrease of 27.1% compared to fiscal year 2020. Automation products and software. Revenues from automation products and software decreased to approximately ¥32.9 million ( $5.1 million ), representing a decrease of 63.9% from fiscal year 2020. The decrease was mainly caused by 1) Affected by the oversea Pandemic and international travel limitation, we were not able to continue our oversea projects in Iraq , which contributed ¥20.0 million of revenue to our automation business for the year ended June 30, 2020 , 2) Orders from Shenhua decreased and resumed at a lower level than prior years and 3) some of our oilfield clients were still in a recovery status from prior years' loss and were prudent on further investment, negatively affecting our automation departments' operation and collection of outstanding balances. Management expect this situation will be eased as oil price increase. We are also seeking for new opportunities in petrochemical segments and other sectors among our oilfield clients as they are investing into new energy and low-carbon and environmentally friendly automation solutions. Equipment and accessories. Revenue from equipment and accessories increased to approximately ¥1.6 million ( $0.2 million ), representing a increase of 11% from fiscal year 2020, as orders for cost effective equipment, such as ultra-deep electric submersible progressing cavity pump from China Petroleum & Chemical Corporation ("Sinopec"), increased as oil and gas price rose and our clients' investment in gas wells production increased. We expect this business will continued and bring a higher benefit in the coming year. Oilfield environmental protection. Revenue from oilfield environmental protection increased to approximately ¥10.9 million ( $1.7 million ), representing a increase of 8792.2% from fiscal year 2020. During this period, our chemicals and related services for wastewater treatment were well accepted by clients and requirements remained stable as our clients kept an increased attention to wastewater quality during their production than prior years. Meanwhile, orders from oily sludge treatment also increased and we had also secured ¥36.3 million contracts for treatment. As we has not complete the treatment, there was barely revenue recorded during this year. Platform outsourcing services. Revenue from platform outsourcing services increased to approximately ¥2.6 million ( $0.4 million ),representing an increase of 100% from fiscal year 2020. The increase was mainly due to the acquisition of FGS during the year ended June 30, 2021 . FGS was consolidated into our operations from January 2021 . Cost and Margin Total cost of revenues decreased by 11.8% to approximately ¥40.7 million ( $6.3 million ). This decrease was mainly caused by the decreased cost of revenue from automation product and software segment, which was partially offset by the increased cost of revenue from the other three segments during the year ended June 30, 2021 . Gross profit decreased to approximately ¥7.2 million ( $1.1 million ), representing a decrease of 63.2% from fiscal year 2020. Our gross profit as a percentage of revenue decreased by 14.7 percentage points to 15.1% for the year ended June 30, 2021 from 29.8% for the same period in 2020. Operating Expenses Total operating expenses increased to approximately ¥68.8 million ( $10.7 million ), representing an increase of 72.9%. Selling and distribution expenses. Selling and distribution expenses were approximately ¥8.0 million ( $1.2 million ), representing a 82% increased year-over-year. We consolidated the selling expenses of FGS since January 2021 and recorded amortization expenses of customer relationship recognized in relation to the step acquisition. Meanwhile, our travelling expenses increased as the travel restriction was lifted when the Covid-19 pandemic appeared to be under control in China by the end of year 2020. Selling expenses were 16.8% of total revenues for the year ended June 30, 2021 , and 6.7% of total revenues for the same period of 2020. General and Administrative Expenses. General and administrative expenses was approximately ¥45.9 million ( $7.1 million ), representing a 75.9% increased year-over-year. The increase was primarily due to incurrence of offering cost of warrants issued during the fiscal year, the step acquisition of FGS as we consolidated the general and administrative expenses of FGS since January 2021 , the increased profession services fees in relation to the multiple financing activities carried out during the year, and the increased depreciation expense for our Gansu production line during the year ended June 30, 2021 , as the production line was transferred from construction in progress to production equipment and depreciated since January 2020 . General and administrative expenses accounted for 95.9% of total revenues for the year ended June 30, 2021 , and 39.7% of total revenues for the same period of 2020. Provision for doubtful accounts. We recorded a provision for doubtful accounts of ¥2.2 million for the year ended June 30, 2020 as compared to a provision for doubtful accounts of ¥8.2 million ( $1.3 million ) for the same period in 2021. The increase was mainly due to 1) we made specific reserve for some outstanding accounts receivable which we did not collect as we expected due to the current unfavorable economy and made specific reserve for the receivables related to Iraq projects due to the delay in collection as a result of COVID-19 pandemic; and 2) the increased long-outstanding pre-contract costs incurred in anticipation of obtaining planned contracts for the Company's revenue, but the progress of these contracts was delayed by the COVID-19 pandemic. As of the date of this report, 21.3% of the Company's contract assets as of June 30, 2021 have been subsequently realized and the remaining balance is expected to be utilized by March 31, 2022 . Management plans to continue to monitor and maintain the provision at a lower risk level. Net Loss Loss from operations was ¥61.6 million ( $9.5 million ), representing an increase of 205.2% from fiscal year 2020, which was a loss of ¥20.2 million. Change in Fair Value of Warrant Liability. The Company classify the warrants issued in connection with common share offering as liabilities at their fair value and adjust the warrant instrument to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement of operations. Change in fair value of warrants issued on June 14, 2021 through fiscal year end was ¥35.4 million ( $5.5 million ) Net Loss Attributable to Recon Technology, Ltd. As a result of the factors described above, net loss was ¥22.8 million ( $3.5 million ) for the year ended June 30, 2021 , an increase of ¥3.6 million ( $0.6 million ) from net loss of ¥19.2 million for the same period of 2020. Basic and Diluted EPS. Basic and diluted net loss per share were ¥1.80 ( US$0.28 ), compared to ¥4.16 in fiscal year 2020. Financial Condition As of June 30,2021 , the Company had cash of approximately ¥344.0 million ( $53.3 million ), compared to ¥30.3 million as of June 30, 2020 . As of June 30, 2021 , the Company had working capital of ¥412.0 million ( $63.8 million ), while as of June 30, 2020 , the Company had working capital of ¥64.1 million. The increase in total current assets at June 30, 2021 compared to June 30, 2020 was mainly due to an increase in cash obtained through offerings, loans to third parties and contract assets, partially offset by a decrease in trade account receivable. Net cash used in operating activities was ¥34.1 million ( $5.3 million ) for the year ended June 30 , 2021,compared to net cash used in operating activities of approximately ¥5.2 million for fiscal year 2020. Net cash used in investing activities was ¥46.5 million ( $7.2 million ) for the year ended June 30, 2021 , compared to ¥2.1 million for fiscal year 2020. Net cash provided by financing activities was ¥394.0 million ( $61.0 million ) for the year ended June 30, 2021 , compared to net cash provided by financing activities of ¥33.2 million for fiscal year 2020. Exchange Rate The translation of RMB amounts into U.S. dollars are included solely for the convenience of readers and have been made at the rate of ¥6.4579 to $1.00 , the approximate exchange rate prevailing on June 30, 2021 . About Recon Technology, Ltd. Recon Technology, Ltd. (RCON) is China's first non-state-owned oil and gas field service company listed on NASDAQ. Recon supplies China's largest oil exploration companies with advanced automated technologies, efficient gathering and transportation equipment and reservoir stimulation measures for increasing petroleum extraction levels, reducing impurities and lowering production costs. Since 2017, the Company has expanded its business operations into other segments of the broader energy industry including electric power, coal chemicals, renewable energy and environmental protection in the energy and chemical industries. Through the years, Recon has taken leading positions on several market segments of the oil and gas field service industry. Recon also has developed stable long-term cooperation relationships with its major clients, and its products and service are well accepted by clients. For additional information please visit: www.recon.cn . Safe Harbor Statement 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, the effect of novel coronavirus and other health matters on target markets, 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. RECON TECHNOLOGY, LTD CONSOLIDATED BALANCE SHEETS As of June 30 As of June 30 As of June 30 2020 2021 2021 RMB RMB U.S. Dollars ASSETS Current assets Cash ¥ 30,336,504 ¥ 343,998,570 $ 53,268,248 Notes receivable 4,180,885 6,305,633 976,429 Trade accounts receivable, net 48,244,015 26,686,888 4,132,470 Trade accounts receivable- related party, net 3,068,920 — — Inventories, net 1,985,723 3,644,522 564,355 Other receivables, net 6,350,802 6,939,676 1,074,610 Loans to third parties 3,200,377 50,476,782 7,816,340 Purchase advances, net 178,767 1,078,137 166,950 Contract costs, net 31,537,586 48,795,906 7,556,056 Prepaid expenses 198,294 146,071 22,619 Prepaid expenses- related parties — 433,000 67,050 Total current assets 129,281,873 488,505,185 75,645,127 Property and equipment, net 29,756,879 27,138,768 4,202,444 Land use right, net 1,280,648 1,253,408 194,090 Intangible assets, net — 6,650,000 1,029,754 Investment in unconsolidated entity 31,541,850 27,931,795 4,325,244 Long-term other receivables, net 3,640 114,679 17,758 Goodwill — 6,996,895 1,083,471 Operating lease right-of-use assets (including ¥803,503 and ¥352,775 ( $54,627 ) from a related party as of June 30, 2020 and June 30, 2021, respectively) 2,549,914 7,925,930 1,227,332 Total Assets ¥ 194,414,804 ¥ 566,516,660 $ 87,725,220 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Short-term bank loans ¥ 9,520,000 ¥ 15,000,000 $ 2,322,753 Trade accounts payable 23,034,347 21,956,481 3,399,966 Other payables 2,609,486 9,862,762 1,527,251 Other payable- related parties 4,498,318 2,400,667 371,744 Contract liabilities 3,486,033 7,686,276 1,190,221 Accrued payroll and employees' welfare 1,917,635 1,954,484 302,652 Investment payable 6,400,000 — — Taxes payable 1,108,288 1,248,994 193,407 Short-term borrowings 200,000 530,000 82,071 Short-term borrowings - related parties 10,230,746 12,676,042 1,962,888 Long-term borrowings - related party - current portion 847,346 920,066 142,472 Operating lease liabilities - current (including ¥450,728 and ¥352,775 ( $54,627 ) from a related party as of June 30, 2020 and June 30, 2021, respectively) 1,328,976 2,226,832 344,825 Total Current Liabilities 65,181,175 76,462,604 11,840,250 Operating lease liabilities - non-current (including ¥352,775 and ¥nil from a related party as of June 30, 2020 and June 30, 2021 , respectively) 1,210,088 4,792,101 742,058 Long-term borrowings - related party 7,379,253 6,486,551 1,004,444 Deferred tax liability — 624,088 96,640 Warrant liability — 190,635,850 29,520,000 Total Liabilities 73,770,516 279,001,194 43,203,392 Commitments and Contingencies Equity Class A common stock, $0.0925 U.S. dollar par value, 150,000,000 shares authorized; 7,202,832 shares and 26,868,391 shares issued and outstanding as of June 30, 2020 and June 30, 2021 , respectively* 4,577,233 16,340,826 2,530,380 Class B common stock, $0.0925 U.S. dollar par value, 20,000,000 shares authorized; no shares issued and outstanding as of June 30, 2020 and June 30, 2021 , respectively* — — — Additional paid-in capital 282,505,455 479,490,763 74,249,242 Statutory reserve 4,148,929 4,148,929 642,462 Accumulated deficit (184,027,586) (206,860,320) (32,032,362) Accumulated other comprehensive income 2,825,731 1,974,836 305,804 Total stockholders' equity 110,029,762 295,095,034 45,695,526 Non-controlling interests 10,614,526 (7,579,568) (1,173,698) Total equity 120,644,288 287,515,466 44,521,828 Total Liabilities and Equity ¥ 194,414,804 ¥ 566,516,660 $ 87,725,220 * Retrospectively restated for effect of stock split on December 27, 2019 and change into dual class structure on April 5, 2021 . RECON TECHNOLOGY, LTD CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS For the years ended June 30 , 2019 2020 2021 2021 RMB RMB RMB USD Revenues Revenues - third party ¥ 98,657,433 ¥ 65,760,651 ¥ 47,852,918 $ 7,410,034 Revenues - related party 3,726,894 — 85,657 13,264 Revenues 102,384,327 65,760,651 47,938,575 7,423,298 Cost of revenues Cost of revenues - third party 70,316,198 46,154,255 40,723,547 6,306,050 Cost of revenues - related party 2,202,765 — — — Cost of revenues 72,518,963 46,154,255 40,723,547 6,306,050 Gross profit 29,865,364 19,606,396 7,215,028 1,117,248 Selling and distribution expenses 9,076,266 4,417,413 8,038,965 1,244,835 General and administrative expenses 41,288,351 26,120,099 45,949,157 7,115,236 Provision for credit losses 610,776 2,203,531 8,191,247 1,268,416 Impairment loss of property and equipment — — 768,312 118,973 Research and development expenses 3,133,545 7,042,385 5,846,295 905,300 Operating expenses 54,108,938 39,783,428 68,793,976 10,652,760 Loss from operations (24,243,574) (20,177,032) (61,578,948) (9,535,512) Other income (expenses) Subsidy income 1,149,016 1,210,318 355,667 55,075 Interest income 40,391 54,746 918,629 142,250 Interest expense (1,589,045) (1,451,890) (2,210,005) (342,220) Income (loss) from investment in unconsolidated entity (959,905) 462,879 (266,707) (41,300) Changing in fair value of warrant liability — — 35,365,792 5,476,400 Remeasurement gain of previously held equity interests in connection with step acquisition — — 979,254 151,638 Foreign exchange transaction gain (loss) 56,603 (17,720) (146,898) (22,747) Other income 162,585 78,417 192,137 29,752 Other income (expense), net (1,140,355) 336,750 35,187,869 5,448,848 Loss before income tax (25,383,929) (19,840,282) (26,391,079) (4,086,664) Income tax expenses (benefit) 398,477 282,322 (524,251) (81,180) Net loss (25,782,406) (20,122,604) (25,866,828) (4,005,484) Less: Net loss attributable to non-controlling interests (426,501) (875,903) (3,034,094) (469,830) Net loss attributable to Recon Technology, Ltd ¥ (25,355,905) ¥ (19,246,701) ¥ (22,832,734) $ (3,535,654) Comprehensive loss Net loss ¥ (25,782,406) ¥ (20,122,604) ¥ (25,866,828) $ (4,005,484) Foreign currency translation adjustment 1,393,843 (84,205) (850,895) (131,761) Comprehensive loss (24,388,563) (20,206,809) (26,717,723) (4,137,245) Less: Comprehensive loss attributable to non- controlling interests (426,501) (875,903) (3,034,094) (469,830) Comprehensive loss attributable to Recon Technology, Ltd ¥ (23,962,062) ¥ (19,330,906) ¥ (23,683,629) $ (3,667,415) Loss per common share - basic and diluted ¥ (6.49) ¥ (4.16) ¥ (1.80) $ (0.28) Weighted - average shares -basic and diluted* 3,908,833 4,624,615 12,697,024 12,697,024 * Retrospectively restated for effect of stock split on December 27, 2019 . RECON TECHNOLOGY, LTD CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended June 30 , 2019 2020 2021 2021 RMB RMB RMB U.S. Dollars Cash flows from operating activities: Net loss ¥ (25,782,406) ¥ (20,122,604) ¥ (25,866,828) $ (4,005,484) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,124,011 1,609,700 3,150,789 487,900 Loss (gain) from disposal of equipment — (89,156) 19,590 3,034 Changing in fair value of warrant liability (35,365,792) (5,476,400) Amortization of offering cost of warrants 12,584,024 1,948,639 Provision for doubtful accounts 610,776 2,203,531 8,191,247 1,268,416 Provision for slow moving inventories 65,380 56,817 654,673 101,376 Impairment of property and equipment — — 768,312 118,973 Amortization of right of use assets — 1,408,551 1,866,803 289,075 Restricted shares issued for management and employees 21,288,204 7,944,835 6,140,037 950,786 Remeasurement gain of previously held equity interests in connection with step acquisition — — (979,254) (151,638) Loss (income) from investment in unconsolidated entity 959,905 (462,879) 266,707 41,300 Deferred tax benefit — — (425,913) (65,953) Interest expenses related to convertible notes — — 430,416 66,650 Restricted shares issued for services 845,781 33,927 — — Changes in operating assets and liabilities: Notes receivable 922,282 (1,107,205) (2,124,748) (329,018) Trade accounts receivable (40,461,376) 18,428,088 18,326,410 2,837,848 Trade accounts receivable-related party (3,409,912) — 3,409,912 528,026 Inventories (1,197,529) (1,124,935) (2,502,263) (387,476) Other receivable (928,882) (287,242) (338,468) (52,412) Purchase advance 5,784,669 1,210,309 (899,371) (139,268) Contract costs 7,554,745 (26,938,013) (21,944,876) (3,398,168) Prepaid expense 316,845 (5,457) 143,354 22,198 Prepaid expense - related parties (217,600) 217,600 (433,000) (67,050) Operating lease liabilities — (1,419,402) (2,762,949) (427,843) Trade accounts payable (400,034) 8,205,660 (2,109,944) (326,725) Other payables (861,620) (23,600) 6,669,009 1,032,698 Other payables-related parties (920,584) 2,207,445 (2,577,610) (399,143) Advance from customers (37,856) 3,366,033 4,160,456 644,247 Accrued payroll and employees' welfare 784,095 533,109 (1,593,822) (246,804) Accrued expenses — 9,425 (983,821) (152,344) Taxes payable 1,748,934 (1,085,213) 76,452 11,839 Net cash used in operating activities (32,212,172) (5,230,676) (34,050,468) (5,272,722) Cash flows from investing activities: Investment in unconsolidated entity (4,205,080) — — — Purchases of property and equipment (1,735,956) (85,974) (522,416) (80,896) Proceeds from disposal of equipment — 900 — — Repayments from loans to third parties 1,000,000 11,239,623 5,150,377 797,537 Payments made for loans to third parties (4,000,000) (9,480,000) (51,638,458) (7,996,226) Payments and prepayments for construction in progress (4,606,823) (3,782,912) — — Step acquisition of FGS, net of cash — — 471,843 73,065 Net cash used in investing activities (13,547,859) (2,108,363) (46,538,654) (7,206,520) Cash flows from financing activities: Proceeds from short-term bank loans 2,500,000 9,520,000 16,020,000 2,480,700 Repayments of short-term bank loans — (2,500,000) (10,540,000) (1,632,121) Proceeds from short-term borrowings 1,081,096 200,000 3,660,000 566,752 Repayments of short-term borrowings — (1,000,000) (3,360,000) (520,297) Proceeds from short-term borrowings-related parties 5,000,000 17,415,000 18,400,000 2,849,244 Repayments of short-term borrowings-related parties (5,000,000) (16,195,000) (15,950,000) (2,469,861) Repayments of long-term borrowings-related party (684,191) (747,630) (816,952) (126,505) Proceeds from warrants issued with common stock — — 212,051,414 32,836,204 Proceeds from sale of common stock, net of issuance costs — 26,141,051 81,091,141 12,556,980 Proceeds from pre-founded warrants received in advance — — 30,276,569 4,688,333 Proceeds from stock issuance for warrants exercised — — 21,130,035 3,271,990 Proceeds from issuance of convertible notes — — 42,014,616 6,505,972 Refund of capital contribution by a non-controlling shareholder (200,000) — — — Capital contribution by non-controlling shareholders 850,000 405,000 50,000 7,743 Net cash provided by financing activities 3,546,905 33,238,421 394,026,823 61,015,134 Effect of exchange rate fluctuation on cash 1,393,873 (84,203) 224,365 34,742 Net increase (decrease) in cash (40,819,253) 25,815,179 313,662,066 48,570,634 Cash at beginning of year 45,340,578 4,521,325 30,336,504 4,697,614 Cash at end of year ¥ 4,521,325 ¥ 30,336,504 ¥ 343,998,570 $ 53,268,248 Supplemental cash flow information Cash paid during the period for interest ¥ 1,542,381 ¥ 1,400,462 ¥ 1,682,863 $ 260,592 Cash received during the period for taxes ¥ 2,002 ¥ 282,322 ¥ (98,338) $ (15,228) Non-cash investing and financing activities Cancellation of common stock issued prior years in exchange of shares of FGS , net of issuance costs — — (1,689,807) (261,667) Issuance of common stock in exchange of shares of FGS , net of issuance costs ¥ 21,433,796 ¥ — ¥ 1,689,807 $ 261,667 Issuance of common stock in exchange of shares of Starry, net of issuance costs — ¥ — ¥ 27,675,450 $ 4,285,549 Investment payable in exchange of interest of FGS ¥ 6,400,000 ¥ — ¥ — $ — Conversion of convertible notes to 9,225,338 shares of common stock ¥ — ¥ — ¥ 42,435,669 $ 6,571,172 Right-of-use assets obtained in exchange for operating lease obligations ¥ — ¥ 1,228,963 ¥ 7,242,819 $ 1,121,552 Inventories used as fixed assets ¥ — ¥ 409,735 ¥ 302,795 $ 46,888 Payable for construction in progress ¥ 5,694,980 ¥ 732,513 ¥ — $ — Receivable for disposal of property and equipment ¥ — ¥ 110,000 ¥ — $ — Payable for issuance cost of common stock ¥ — ¥ 374,696 ¥ — $ — Capital contribution receivable due from non-controlling Interest ¥ — ¥ — ¥ 50,000,000 $ 7,742,510 View original content: https://www.prnewswire.com/news-releases/recon-technology-ltd-reports-financial-results-for-fiscal-year-2021-301423827.html SOURCE Recon Technology, Ltd.

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