EX-99.3 6 v367026_ex99-3.htm EXHIBIT 99.3

Recon Technology Reports Second Quarter 2014 Financial Results

Operations continue to improve, Revenue and Net profit increased

BEIJING, Feb.13, 2014 /PRNewswire/ -- Recon Technology, Ltd. (Nasdaq: RCON) ("Recon" or the "Company"), a Chinese non-state-owned oilfield services provider to oil and gas companies and their affiliates, today reported results for its second quarter of fiscal 2014 ended December 31, 2013.

Q2 FY2014 Highlights

| For the Three Months Ended
| December 31,
| 2012 |  | 2013 |  | % Change
Revenues | RMB 45,980,600 |  | RMB 46,266,326 |  | 0.6%
Gross Profit | 14,019,773 |  | 16,524,412 |  | 17.9%
Net income attributable to ordinary shareholders | 5,288,361 |  | 5,814,671 |  | 10.0%
Non GAAP net income | 7,479,058 |  | 9,295,123 |  | 24.3%
Basic Earnings per share | RMB 1.34 |  | RMB 1.40 |  | 4.5%
Basic Weighted-average shares | 3,951,811 |  | 4,162,115 |  | 5.3%
Diluted Earnings per share | RMB 1.34 |  | RMB 1.38 |  | 2.8%
Diluted Weighted-average shares - diluted | 3,951,811 |  | 4,224,560 |  | 6.9%

| · | Total revenues for the second quarter of FY2014 were approximately RMB46.3 million ($7.6 million), an increase of 0.6% from the same period of FY2013, which were mainly contributed by sales of furnaces and automation products from our newly developed clients.

| · | Gross profit for the second quarter of FY2014 increased 17.9% to above RMB16.5 million ($2.7 million). Gross margin improved from 30.5% to 35.7%.

| · | Net income attributable to ordinary shareholders for the second quarter of FY2014 was RMB5.8 million ($1.0 million), or RMB1.38 ($0.23) per diluted share. Net income attributable to ordinary shareholders for the same period of FY2013 was RMB5.3 million, or RMB1.34 ($0.21) per diluted share.

| · | Non GAAP net income[1] for the second quarter of FY2014 increased 24.3% to RMB9.3 million ($1.5 million). Non GAAP diluted EPS for the second quarter was RMB2.2 (or $0.36).

[1] | We define Non GAAP net income as net income (loss) adjusted for income tax expense, interest expense, loss from investment, non-cash stock compensation expense, depreciation and amortization. Detailed explanation of the Company's non-GAAP financial measures and related reconciliations to net income are included in the accompanying "Adjusted EBITDA" part and in our 10Q.We think it is useful to an equity investor in evaluating our operating performance because: (1) it is widely used by investors in our industry to measure a company's operating performance without regard to items such as interest expense, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which the assets were acquired; and (2) it helps investors more meaningfully evaluate and compare the results of our operations from period to period by removing the impact of our capital structure and asset base from our operating results.

Six Months Highlights

| For the Six Months Ended
| December 31,
| 2012 |  | 2013 |  | % Change
Revenues | RMB 55,034,792 |  | RMB 57,779,036 |  | 5.0%
Gross Profit | 16,465,198 |  | 21,815,512 |  | 32.5%
Net income attributable to ordinary shareholders | 2,944,195 |  | 5,861,115 |  | 99.1%
Non GAAP net income | 5,762,878 |  | 10,776,811 |  | 87%
Basic and Diluted Earnings per share | RMB 0.75 |  | RMB 1.44 |  | 93.9%
Basic and Diluted Weighted-average shares | 3,951,811 |  | 4,056,963 |  | 2.7%

| · | Total revenues for the first half year of FY2014 were approximately RMB57.8 million ($9.5 million), an increase of 5.0% from the same period of FY2013, mainly caused by increase of sales of furnaces and automation products.

| · | Gross profit for the first half year of FY2014 increased 32.5% to RMB21.8 million ($3.6 million). Gross margin increased from 29.9% to 37.8%.

| · | Net income attributable to ordinary shareholders for the six months ended December 31, 2013 was RMB5.9 million ($1.0 million), or RMB1.44 ($0.24) per diluted share. Net income attributable to ordinary shareholders for the same period of FY2013 was RMB2.9 million, or RMB0.75 ($0.12) per diluted share.

| · | Non GAAP net income for the first half year of FY2014 increased 87% to RMB10.8 million ($1.8 million). Non GAAP diluted EPS for the six months ended December 31, 2013 was RMB2.66 (or $0.43).

"We're very pleased to continue improving our net profit in the quarter, as it was up almost 100% for the first half of fiscal year 2014," said Mr. Yin, CEO of Recon Technology. "We have been expanding our client base actively since last year, and our newly developed clients, such as Jilin Petroleum Group, North China Bureau of CNPC and Southwest Oil and Gas Branch of Sinopec, contributed more than half to our furnaces and automation business increase. As we strengthen our design capacity and service offerings, we believe our leading position in the furnace and oilfield automation segment will be consolidated.

"Our onsite service business, mainly focused on the fracturing segment, is well underway. We have achieved new contracts. Also, our cooperation with Baker Hughes has expanded to additional down well services, such as milling. Through these collaborative experimental projects with well-known international companies, our working performance and solutions can continue to improve, which will position us for new business opportunities from our oilfield clients.

"As to the coming year, we are still positive and confident," Mr. Yin continued. "According to the 2014 Energy Task Guidance of China's National Energy Bureau, the government's goals include increasing oil and gas production, improving proven ratios and extraction rates, encouraging the development of unconventional oil and gas resources and accelerating construction of oil and gas infrastructures. These points are quite favorable for our industry and our business. Our business operates mainly in China's northeast, northwest and Bohai Bay districts, where China's major producing oil and gas fields are located. Recon's product lines mainly focus on helping our clients improve extraction rates and reduce production costs. Over the years, our products and services have been well-received by our clients, and we will continue to devote our efforts as professional technology and service integrators."

Q2 FY2014 Financial Results

Total revenues for the second quarter of FY2013 increased slightly to RMB46.3 million ($7.6 million). Revenues from automation business and furnaces were quite strong, increasing 50%. Overall, our newly developed clients, Jilin Petroleum Group, Qinghai Oilfield and Southwest Branch of Sinopec, contributed most of our increasing business.

Gross profit increased to approximately RMB16.5 million ($2.7 million) for the second quarter of FY2014, up 17.9% from the same period of FY2013. Gross margin increased to 35.7% for the second quarter of FY2014 from 30.5% for the same period in FY2013. The improvement in overall gross margin was mainly due to software and furnace sales contributing to a higher portion of total revenues.

Selling and distribution expenses increased by 37.7%, from approximately RMB1.6 million for the three months ended December 31, 2012 to approximately RMB2.3 million ($0.4 million) for the second quarter of FY2014. This increase was primarily due to increased shipping charge and service charges. General and administrative expenses increased by 48.5%, or RMB1.2 million ($0.2 million), from approximately RMB2.5 million in the three months ended December 31, 2012 to approximately RMB3.7 million ($0.6 million) in the same period of 2013, mainly due to increases in fees related to IR service and salaries. Research and development expenses were RMB2.7 million ($0.4 million) for the second quarter of FY2014, down 36.6% compared to the second quarter FY2013. Overall, operating expenses increased by 3.5% year over year to RMB8.6 million ($1.3 million) for the second quarter of FY2014.

Income from operations was RMB7.9 million ($1.3 million) for the second quarter of FY2014, up 38.9% compared to RMB5.7 million for the same period of FY2013. This increase in income from operations is mainly driven by increased revenue as well as a decrease in R&D expenses.

Investment loss was approximately RMB0.4 million ($0.06 million) for the second quarter of FY2014. As of the date, we held approximately 25.0% interest of Avalon. As it has not yet filed its current period report with the SEC, this amount assumes similar performance to the prior quarter.

Net income attributable to ordinary shareholders increased by 10.0% to RMB5.8 million ($0.9 million) for the second quarter of FY2014 from RMB5.3 million for the same period of FY2013. Diluted earnings per share was RMB1.38 ($0.23) for the second quarter of FY2014, compared to RMB1.34 ($0.22) for the same period of FY2013 due to the issuance of additional shares in the current period.

Adjusted EBITDA was RMB9.3 million ($1.5 million) for the second quarter of FY2014, up 24.3% compared to RMB7.5 million for the same period of FY2013.

Reconciliation of Adjusted EBITDA to Net Income

| For the Three Months Ended
| December 31,
| 2012 |  | 2013 |  | 2013
| RMB |  | RMB |  | USD
Net income | RMB 5,887,567 |  | 6,579,742 |  | $ 1,076,810
Provision for income taxes | 423,308 |  | 1,251,862 |  | 204,874
Interest expense and foreign currency adjustment | 473,057 |  | 472,081 |  | 77,259
Loss from investment | - |  | 556 |  | 91
Stock compensation expense | 452,348 |  | 360,466 |  | 58,992
Depreciation and amortization | 242,778 |  | 480,555 |  | 78,645
Adjusted EBITDA | RMB 7,479,058 |  | 9,295,123 |  | $ 1,521,198

As of December 31, 2013, cash and cash equivalents were RMB21.7 million ($3.6 million). Cash and cash equivalents consist of cash on hand, demand deposits and highly liquid short-term debt investments with stated maturities of no more than six months.

Year-to-Date FY2014 Financial Results

Total revenues for the six months ended December 31, 2013 increased by 5.0%, or approximately RMB2.7 million ($0.4 million) to RMB57.8 million ($9.5 million) from RMB55.0 million for the same period of fiscal 2013, primarily driven by strong sales from furnaces and automation products sales.

Gross profit increased to approximately RMB21.8 million ($3.6 million) for the six months ended December 31, 2013, up 32.5% from the same period of fiscal 2013. Gross margin increased from 29.9% for the six months ended December 31, 2012 to 37.8% for the same period ended December 31, 2013. This was mainly because revenues for fracturing services, which have lower margin than our other services accounted for a larger part of our revenue during the six months ended December 31, 2012.

Selling and distribution expenses increased by 24.2%, from approximately RMB2.9 million for the six months ended December 31, 2012 to approximately RMB3.6 million ($0.6 million) for the same period of 2013. This increase was primarily from the increased shipping and service charges. General and administrative expenses increased by 44.0% from RMB4.5 million for the six months ended December 31, 2012 to RMB6.5 million ($1.1 million) for the same period of fiscal 2014. Research and development expenses decreased by 41.5%, from approximately RMB5.7 million for the six months ended December 31, 2012 to approximately RMB3.4 million ($0.5 million) for the same period of 2013. This decrease was primarily due to lower spending on R&D materials and equipment for our furnaces and fracturing servies. Overall, operating expense were RMB13.4 million ($2.2 million) for the six months ended December 31, 2013, steady compared to same period of last year.

Income from operations was RMB8.4 million ($1.4 million) for the six months ended December 31, 2013, compared to income of RMB3.3 million for the same period of 2012. This increase in income from operations can be attributed primarily to the increased revenue, gross margins and decreases in percentage of research and development expenses.

Net income attributable to ordinary shareholders increased to RMB5.9 million ($1.0 million) for the six months ended December 31, 2013, an improvement of approximately RMB2.9 million ($0.5 million) compared to the same period of fiscal 2013. Diluted earnings per share was RMB1.44($0.24) for the six months ended December 31, 2013, compared to diluted earnings per share of RMB0.75 ($0.12) for the same period ended December 31, 2012.

Adjusted EBITDA was RMB10.8 million ($1.8 million) for the six months ended December 31, 2013, compared to approximately RMB5.8 million income for the same period in 2012, an improvement of 87.0%.

Reconciliation of Adjusted EBITDA to Net Income (Loss)

| For the Six Months Ended December 31,
| 2012 |  | 2013 |  | 2013
| RMB |  | RMB |  | USD
Net income (loss) | RMB | 3,549,283 |  | RMB | 6,786,096 |  | $ | 1,110,581
Provision for income taxes |  | 454,932 |  |  | 1,459,189 |  |  | 238,804
Interest expense and foreign currency adjustment |  | 536,353 |  |  | 599,040 |  |  | 98,036
Change in fair value of warrants liability |  | - |  |  | 556 |  |  | 91
Loss from investment |  | - |  |  | 735,080 |  |  | 120,300
Stock compensation expense |  | 907,153 |  |  | 895,509 |  |  | 146,555
Depreciation and amortization |  | 315,157 |  |  | 301,341 |  |  | 49,316
Adjusted EBITDA | RMB | 5,762,878 |  | RMB | 10,776,811 |  | $ | 1,763,683

For the six months ended December 31, 2013, net cash used in operating activities was approximately RMB6.8 million ($1.1 million) for the six months ended December 31, 2013. This was a decrease of approximately RMB12.0 million ($2.0 million) compared to net cash provided by operating activities of approximately RMB5.2 million for the six months ended December 31, 2012. Our net cash used in operating activities were primarily for purchase of inventories for projects in the upcoming quarters.

Net cash used in investing activities was RMB36,495 ($5,973) for the six months ended December 31, 2013, a decrease of RMB359,495 ($58,883) from RMB395,990 for the same period of 2012. The decrease was due to decrease in purchase of property and equipment.

Net cash provided by financing activities amounted to approximately RMB16.1 million ($2.6 million) for the six months ended December 31, 2013, compared to net cash used in financing activities of approximately RMB6.6 million for the six months ended December 31, 2012. During the six-month period ended December 31, 2013, we received net proceeds of RMB12.1 million ($2.0 million) from the common stock issuance of 546,500 shares to institutional investors in November 2013. In addition, we repaid approximately RMB5.3 million ($0.9 million) short term borrowings to related parties with fund generated from operation and received RMB9.36 million ($1.5 million) net loan proceeds from a commercial bank, which was guaranteed by one of our shareholders.

About Recon Technology, Ltd.

Recon Technology, Ltd. is a non-state-owned oil field service company in China. The company has been providing software, equipment and services designed to increase the efficiency and automation in oil and gas exploration, extraction, production and refinery for Chinese oil and gas fields for more than 10 years. More information may be found at http://www.recon.cn or e-mail: info@recon.cn.

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.

Contact:

At the Company:
Recon Technology, Ltd.
Tel: +86-10-8494-5799
Email: info@recon.cn
Web: http://www.recon.cn

RECON TECHNOLOGY, LTD
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
| As of June 30, |  | As of December 31, |  | As of December 31,
| 2013 |  | 2013 |  | 2013
ASSETS | RMB |  | RMB |  | U.S. Dollars
Current assets |  |  |  |  |  |  |  |
Cash and cash equivalents | RMB | 12,350,392 |  | RMB | 21,733,565 |  | $ | 3,556,815
Notes receivable |  | 2,578,855 |  |  | - |  |  | -
Trade accounts receivable, net |  | 38,648,780 |  |  | 66,732,266 |  |  | 10,921,096
Trade accounts receivable- related parties, net |  | 18,744,364 |  |  | 17,798,136 |  |  | 2,912,761
Inventories, net |  | 13,271,070 |  |  | 22,070,728 |  |  | 3,611,994
Other receivables, net |  | 19,131,503 |  |  | 14,191,630 |  |  | 2,322,537
Other receivables- related parties |  | 742,528 |  |  | 595,304 |  |  | 97,425
Purchase advances, net |  | 18,412,507 |  |  | 17,680,032 |  |  | 2,893,433
Purchase advances- related parties |  | 394,034 |  |  | 394,034 |  |  | 64,486
Tax recoverable |  | 575,650 |  |  | - |  |  | -
Prepaid expenses |  | 2,853,956 |  |  | 1,630,388 |  |  | 266,821
Deferred tax asset |  | 1,006,721 |  |  | 1,038,932 |  |  | 170,027
Total current assets |  | 128,710,360 |  |  | 163,865,015 |  |  | 26,817,395
Property and equipment, net |  | 1,709,846 |  |  | 1,445,001 |  |  | 236,482
Long-term investment |  | 1,549,450 |  |  | 816,310 |  |  | 133,594
Long-term other receivable |  | 3,502,680 |  |  | 6,627,046 |  |  | 1,084,552
Total Assets | RMB | 135,472,336 |  | RMB | 172,753,372 |  | $ | 28,272,023
LIABILITIES AND EQUITY |  |  |  |  |  |  |  |
Current liabilities |  |  |  |  |  |  |  |
Short-term bank loans | RMB | 10,000,000 |  | RMB | 19,360,000 |  | $ | 3,168,369
Trade accounts payable |  | 7,384,165 |  |  | 23,101,652 |  |  | 3,780,710
Trade accounts payable- related parties |  | 3,994,718 |  |  | - |  |  | -
Other payables |  | 1,964,691 |  |  | 1,408,449 |  |  | 230,500
Other payable- related parties |  | 4,239,675 |  |  | 3,516,222 |  |  | 575,449
Deferred revenue |  | 3,381,382 |  |  | 3,926,136 |  |  | 642,533
Advances from customers |  | 470,700 |  |  | 554,162 |  |  | 90,692
Accrued payroll and employees' welfare |  | 1,992,783 |  |  | 353,382 |  |  | 57,833
Accrued expenses |  | 488,730 |  |  | 758,000 |  |  | 124,052
Taxes payable |  | 6,754,428 |  |  | 10,047,404 |  |  | 1,644,312
Short-term borrowings- related parties |  | 5,503,279 |  |  | 200,000 |  |  | 32,731
Short-term borrowings- other |  | 570,375 |  |  | 460,000 |  |  | 75,281
Warrants liability |  | - |  |  | 5,044,722 |  |  | 825,596
Total current liabilities |  | 46,744,926 |  |  | 68,730,129 |  |  | 11,248,058
Commitments and Contingency |  |  |  |  |  |  |  |
Equity |  |  |  |  |  |  |  |
Common stock, ($ 0.0185 U.S. dollar par value, 25,000,000 shares authorized; 3,951,811 and 4,528,311shares issued and outstanding as of June 30, 2013 and December 31, 2013, respectively) |  | 529,979 |  |  | 595,335 |  |  | 97,428
Additional paid-in capital |  | 69,516,447 |  |  | 77,883,568 |  |  | 12,746,067
Appropriated retained earnings |  | 3,023,231 |  |  | 4,655,550 |  |  | 761,906
Unappropriated retained earnings |  | 8,749,963 |  |  | 12,978,762 |  |  | 2,124,045
Accumulated other comprehensive loss |  | (293,201) |  |  | (231,698) |  |  | (37,918)
Total controlling shareholders' equity |  | 81,526,419 |  |  | 95,881,517 |  |  | 15,691,528
Non-controlling interest |  | 7,200,991 |  |  | 8,141,726 |  |  | 1,332,437
Total equity |  | 88,727,410 |  |  | 104,023,243 |  |  | 17,023,965
Total Liabilities and Equity | RMB | 135,472,336 |  | RMB | 172,753,372 |  | $ | 28,272,023
RECON TECHNOLOGY, LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
| For the six months ended |  | For the three months ended
| December 31, |  | December 31,
| 2012 |  | 2013 |  | 2013 |  | 2012 |  | 2013 |  | 2013
| RMB |  | RMB |  | USD |  | RMB |  | RMB |  | USD
Revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Hardware and software | RMB | 31,797,756 |  | RMB | 55,339,141 |  | $ | 9,056,550 |  | RMB | 23,275,615 |  | RMB | 44,242,049 |  | $ | 7,240,451
Service |  | 20,504,959 |  |  | 397,589 |  |  | 65,068 |  |  | 20,504,959 |  |  | 397,589 |  |  | 65,068
Hardware and software - related parties |  | 2,732,077 |  |  | 2,042,306 |  |  | 334,234 |  |  | 2,200,026 |  |  | 1,626,688 |  |  | 266,216
Total revenues |  | 55,034,792 |  |  | 57,779,036 |  |  | 9,455,852 |  |  | 45,980,600 |  |  | 46,266,326 |  |  | 7,571,735
Cost of revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Hardware and software | RMB | 20,506,088 |  | RMB | 35,599,656 |  | $ | 5,826,076 |  | RMB | 14,739,526 |  | RMB | 29,480,982 |  | $ | 4,824,722
Service |  | 15,722,614 |  |  | 34,946 |  |  | 5,719 |  |  | 15,701,994 |  |  | 34,946 |  |  | 5,719
Hardware and software - related parties |  | 2,340,892 |  |  | 328,922 |  |  | 53,830 |  |  | 1,519,307 |  |  | 225,986 |  |  | 36,984
Total cost of revenues |  | 38,569,594 |  |  | 35,963,524 |  |  | 5,885,625 |  |  | 31,960,827 |  |  | 29,741,914 |  |  | 4,867,425
Gross profit |  | 16,465,198 |  |  | 21,815,512 |  |  | 3,570,227 |  |  | 14,019,773 |  |  | 16,524,412 |  |  | 2,704,310
Selling and distribution expenses |  | 2,902,994 |  |  | 3,604,440 |  |  | 589,886 |  |  | 1,634,196 |  |  | 2,250,518 |  |  | 368,309
General and administrative expenses |  | 4,485,758 |  |  | 6,457,563 |  |  | 1,056,815 |  |  | 2,502,647 |  |  | 3,715,640 |  |  | 608,085
Research and development expenses |  | 5,732,189 |  |  | 3,353,997 |  |  | 548,900 |  |  | 4,198,860 |  |  | 2,661,397 |  |  | 435,552
Operating expenses |  | 13,120,941 |  |  | 13,416,000 |  |  | 2,195,601 |  |  | 8,335,703 |  |  | 8,627,555 |  |  | 1,411,946
Income from operations |  | 3,344,257 |  |  | 8,399,512 |  |  | 1,374,626 |  |  | 5,684,070 |  |  | 7,896,857 |  |  | 1,292,364
Other income (expenses) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Subsidy income |  | 800,000 |  |  | 1,018,313 |  |  | 166,652 |  |  | 800,000 |  |  | 684,601 |  |  | 112,039
Interest income |  | 305,588 |  |  | 204,970 |  |  | 33,544 |  |  | 304,278 |  |  | 101,769 |  |  | 16,655
Interest expense |  | (876,414) |  |  | (479,648) |  |  | (78,497) |  |  | (546,658) |  |  | (258,389) |  |  | (42,287)
Loss from investment |  | - |  |  | (735,080) |  |  | (120,300) |  |  | - |  |  | (360,466) |  |  | (58,992)
Change in fair value of warrants liability |  | - |  |  | 556 |  |  | 91 |  |  | - |  |  | 556 |  |  | 91
Gain (loss) from foreign currency exchange |  | 340,061 |  |  | (119,392) |  |  | (19,539) |  |  | 73,601 |  |  | (213,692) |  |  | (34,972)
Other income (expense) |  | 90,723 |  |  | (43,946) |  |  | (7,192) |  |  | (4,416) |  |  | (19,632) |  |  | (3,213)
Income before income tax |  | 4,004,215 |  |  | 8,245,285 |  |  | 1,349,385 |  |  | 6,310,875 |  |  | 7,831,604 |  |  | 1,281,685
Provision for income tax |  | 454,932 |  |  | 1,459,189 |  |  | 238,804 |  |  | 423,308 |  |  | 1,251,862 |  |  | 204,874
Net Income |  | 3,549,283 |  |  | 6,786,096 |  |  | 1,110,581 |  |  | 5,887,567 |  |  | 6,579,742 |  |  | 1,076,811
Less: Net income attributable to non-controlling interest |  | 605,088 |  |  | 924,981 |  |  | 151,378 |  |  | 599,206 |  |  | 765,071 |  |  | 125,208
Net Income attributable to Recon Technology, Ltd | RMB | 2,944,195 |  | RMB | 5,861,115 |  | $ | 959,203 |  | RMB | 5,288,361 |  | RMB | 5,814,671 |  | $ | 951,603
Comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net income |  | 3,549,283 |  |  | 6,786,096 |  |  | 1,110,581 |  |  | 5,887,567 |  |  | 6,579,742 |  |  | 1,076,811
Foreign currency translation adjustment |  | (16,172) |  |  | 77,277 |  |  | 12,647 |  |  | (210) |  |  | 82,881 |  |  | 13,564
Comprehensive income |  | 3,533,111 |  |  | 6,863,373 |  |  | 1,123,228 |  |  | 5,887,357 |  |  | 6,662,623 |  |  | 1,090,375
Less: Comprehensive income attributable to non-controlling interest |  | 603,291 |  |  | 932,709 |  |  | 152,643 |  |  | 595,635 |  |  | 773,360 |  |  | 126,565
Comprehensive income attributable to Recon Technology, Ltd | RMB | 2,929,820 |  | RMB | 5,930,664 |  | $ | 970,585 |  | RMB | 5,291,722 |  | RMB | 5,889,263 |  | $ | 963,810
Earnings per common share - basic | RMB | 0.75 |  | RMB | 1.44 |  | $ | 0.24 |  | RMB | 1.34 |  | RMB | 1.40 |  | $ | 0.23
Earnings per common share - diluted | RMB | 0.75 |  | RMB | 1.44 |  | $ | 0.24 |  | RMB | 1.34 |  | RMB | 1.38 |  | $ | 0.23
Weighted - average shares -basic |  | 3,951,811 |  |  | 4,056,963 |  |  | 4,056,963 |  |  | 3,951,811 |  |  | 4,162,115 |  |  | 4,162,115
Weighted - average shares -diluted |  | 3,951,811 |  |  | 4,056,963 |  |  | 4,056,963 |  |  | 3,951,811 |  |  | 4,224,560 |  |  | 4,224,560

RECON TECHNOLOGY, LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the six months ended December 31,
| 2012 |  | 2013 |  | 2013
| RMB |  | RMB |  | U.S. Dollars
Cash flows from operating activities: |  |  |  |  |  |  |  |
Net income | RMB | 3,549,283 |  | RMB | 6,786,096 |  | $ | 1,110,581
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |  |  |  |  |  |  |
Depreciation |  | 315,157 |  |  | 301,341 |  |  | 49,316
Gain from disposal of equipment |  | (68,339) |  |  | - |  |  | -
Provision/(recovery of) for doubtful accounts |  | (251,451) |  |  | 378,584 |  |  | 61,957
Share based compensation |  | 907,153 |  |  | 895,509 |  |  | 146,555
Loss from investment |  | - |  |  | 735,080 |  |  | 120,300
Deferred tax provision/(benefit) |  | 6,024 |  |  | (32,211) |  |  | (5,272)
Change in fair value of warrants liability |  | - |  |  | (556) |  |  | (91)
Restricted shares issued to consulting firm |  | - |  |  | 407,972 |  |  | 66,767
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |
Trade accounts receivable |  | (20,620,729) |  |  | (27,881,579) |  |  | (4,562,971)
Trade accounts receivable-related parties |  | 4,145,640 |  |  | 610,501 |  |  | 99,912
Notes receivable |  | - |  |  | 2,578,855 |  |  | 422,044
Other receivable, net |  | (793,654) |  |  | 1,830,372 |  |  | 299,549
Other receivables related parties, net |  | (517,022) |  |  | 147,224 |  |  | 24,094
Purchase advance, net |  | (1,435,147) |  |  | 472,846 |  |  | 77,384
Purchase advance-related party, net |  | 699,500 |  |  | - |  |  | -
Tax recoverable |  | 2,790,722 |  |  | 575,650 |  |  | 94,208
Prepaid expense |  | 424,771 |  |  | 1,223,568 |  |  | 200,244
Inventories |  | 11,056,578 |  |  | (8,799,658) |  |  | (1,440,112)
Trade accounts payable |  | (2,698,700) |  |  | 15,717,487 |  |  | 2,572,252
Trade accounts payable-related parties |  | 3,421,001 |  |  | (3,994,718) |  |  | (653,757)
Other payables |  | (958,746) |  |  | (556,242) |  |  | (91,032)
Other payables-related parties |  | 4,898,274 |  |  | (723,453) |  |  | (118,397)
Deferred income |  | (258,569) |  |  | 544,754 |  |  | 89,152
Advances from customers |  | 475,295 |  |  | 83,462 |  |  | 13,659
Accrued payroll and employees' welfare |  | 272,755 |  |  | (1,639,401) |  |  | (268,297)
Accrued expenses |  | (203,646) |  |  | 269,270 |  |  | 44,067
Taxes payable |  | 54,589 |  |  | 3,292,976 |  |  | 538,913
Net cash provided by (used in) operating activities |  | 5,210,739 |  |  | (6,776,271) |  |  | (1,108,975)
Cash flows from investing activities: |  |  |  |  |  |  |  |
Purchase of property and equipment |  | (490,144) |  |  | (36,495) |  |  | (5,973)
Proceeds from disposal of equipment |  | 94,154 |  |  | - |  |  | -
Net cash used in investing activities |  | (395,990) |  |  | (36,495) |  |  | (5,973)
Cash flows from financing activities: |  |  |  |  |  |  |  |
Proceeds from short-term bank loans |  | 5,000,000 |  |  | 15,400,000 |  |  | 2,520,293
Repayments of short-term bank loans |  | (12,000,000) |  |  | (6,040,000) |  |  | (988,479)
Proceeds from borrowings-related parties |  | 1,610,000 |  |  | - |  |  | -
Repayment of short-term borrowings |  | (949,183) |  |  | (110,375) |  |  | (18,063)
Repayment of short-term borrowings-related parties |  | (242,434) |  |  | (5,303,279) |  |  | (867,910)
Proceeds from sale of common stock, net of issuance costs |  | - |  |  | 12,132,882 |  |  | 1,985,612
Capital contribution in VIE |  | 20,000 |  |  | - |  |  | -
Net cash provided by (used in) financing activities |  | (6,561,617) |  |  | 16,079,228 |  |  | 2,631,453
Effect of exchange rate fluctuation on cash and cash equivalents |  | 282,730 |  |  | 116,711 |  |  | 19,102
Net increase (decrease) in cash and cash equivalents |  | (1,464,138) |  |  | 9,383,173 |  |  | 1,535,607
Cash and cash equivalents at beginning of period |  | 3,533,283 |  |  | 12,350,392 |  |  | 2,021,208
Cash and cash equivalents at end of period | RMB | 2,069,145 |  | RMB | 21,733,565 |  | $ | 3,556,815
Supplemental cash flow information |  |  |  |  |  |  |  |
Cash paid during the period for interest | RMB | 943,986 |  | RMB | 689,828 |  | $ | 112,894
Cash paid during the period for taxes | RMB | - |  | RMB | - |  | $ | -