Recon Technology, Ltd Reports Financial Results for the First Six Months of Fiscal Year 2026
BEIJING, March 13, 2026 /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 the first six months of fiscal year 2026. First Six Months of Fiscal 2026 Financial Highlights: Total revenue increased to RMB85.0 million ($12.2 million) for the six months ended December 31, 2025, from RMB42.0 million ($5.8 million) for the same period in 2024. Gross profit increased to RMB28.5 million ($4.1 million) for the six months ended December 31, 2025, from RMB13.4 million ($1.9 million) for the same period in 2024. Gross margin increased to 33.5% for the six months ended December 31, 2025 from 31.7% for the same period in 2024. Net loss was RMB7.2 million ($1.0 million) for the six months ended December 31, 2025, a decrease of RMB13.5 million ($1.9 million) from net loss of RMB20.7 million ($3.0 million) for the same period of 2024. For the Six Months Ended December 31, (in RMB millions, except earnings per share; differences dueto rounding) 2025 2024 Increase /(Decrease) Percentage Change Revenue RMB 85.0 RMB 42.0 RMB 43.0 102.2 % Gross profit 28.5 13.4 15.1 113.2 % Gross margin 33.5 % 31.7 % 1.8 % — Net loss (7.2) (20.7) (13.5) 65.2 % Net loss per share – Basic and diluted (0.61) (2.29) (1.68) 73.3 % Management Commentary Mr. Shenping Yin, Founder and CEO of Recon, stated: "We are encouraged by the significant progress the Company has made during the first half of fiscal year 2026. For the six months ended December 31, 2025, Recon's core business remained stable and achieved substantial growth, primarily driven by the successful execution of overseas oilfield projects and the recovery of domestic oilfield production activities. Furthermore, Recon remains committed to diversifying its revenue streams and seizing opportunities in the circular economy. The Company's plastic chemical recycling project, launched in 2023, continues to progress on schedule. The project, which is expected to be fully completed by July 2026, will position Recon to capitalize on the growing demand for sustainable and recycled materials, aligning with global ESG trends and creating long-term value for shareholders. " Mr. Yin continued, "Amid a dynamic global energy market characterized by supply-demand rebalancing and evolving industry changes, the Company has demonstrated resilience and adaptability, leveraging its core strengths to drive revenue growth while navigating operational challenges. Our focus on high-value-added services, strategic diversification, and operational excellence will continue to guide our decisions as we pursue our long-term growth objectives." Recon Technology remains committed to delivering innovative, reliable solutions to its customers while upholding the highest standards of corporate governance and social responsibility. The Company will continue to provide timely updates on its business progress and financial performance as it executes its strategic plan. First Six Months Fiscal 2026 Financial Results: Revenue Total revenues for the six months ended December 31, 2025 were approximately RMB85.0 million ($12.2 million), an increase of approximately RMB43.0 million ($6.2 million) or 102.2% from RMB42.0 million ($6.0 million) for the same period in 2024. Revenue from automation product and software increased by RMB41.4 million ($5.9 million) or 197.6%. For the six months ended December 31, 2025, the increase in revenue from automation products and software was primarily driven by the Company's RMB44.2 million overseas oilfield projects during the period. This was a consequence of the second phase of oilfield capacity construction and the launch of a major automation service and maintenance project that we secured outside China in 2012. The growth was partially offset by a decline of RMB2.7 million in the domestic oilfield business, due to reduced maintenance efforts in the domestic market during the six months period, as our focus shifted towards overseas projects. Looking ahead, we will be making a particular shift in our personnel, moving them from overseeing markets to strengthening our domestic market maintenance. Revenue from equipment and accessories increased by RMB1.6 million ($0.2 million) or 10.2 %. For the six months ended December 31, 2025, the increase was primarily driven by a RMB4.1 million growth contributed by offshore oilfield operations, as well as revenues of about RMB1.2 million from new onshore oilfield customers. This increase offset some of the RMB3.7 million revenue decline due to reduced business from some occasional orders we achieved in the compared period. Revenue from oilfield environmental protection services increased by RMB2.8 million ($0.4 million), or 101.3%. This growth was primarily driven by the increase of settlement prices of some wastewater treatment clients. Revenue from platform outsourcing services decreased by RMB2.7 million ($0.4 million) or 100%. FGS's operations were materially and adversely affected by strategic shifts in its major clients' business decisions to terminate online cooperation of third-party companies and unfavorable changes in domestic industry policies. Consequently, FGS's revenue and active business activities declined precipitously, resulting in zero revenue for the six months ended December 31, 2025. Cost of revenue Cost of revenues increased from RMB28.7 million ($4.1 million) for the six months ended December 31, 2024 to RMB56.6 million ($8.1 million) for the same period in 2025. For the six months ended December 31, 2024 and 2025, cost of revenue from automation product and software was approximately RMB12.4 million and RMB40.7 million ($5.8 million), respectively, representing an increase of approximately RMB28.3 million ($4.0 million) or 228.6%. The increase in cost of revenue from automation product and software was primarily attributable to increased revenue of automation products and software. For the six months ended December 31, 2024 and 2025, cost of revenue from equipment and accessories was approximately RMB11.2 million and RMB13.2 million ($1.9 million), respectively, representing an increase of approximately RMB2.0 million ($0.3 million) or 18.0%. The increase in costs of revenue was primarily driven by expanded business activity, mirroring the same factor behind the growth in revenue. For the six months ended December 31, 2024 and 2025, cost of revenue from oilfield environmental protection was approximately RMB4.8 million and RMB2.7 million ($0.4 million), respectively, representing a decrease of approximately RMB2.1 million ($0.3 million) or 43.7%. While actively pursuing new business opportunities in a constrained market, the Company undertook testing projects. Given their high uncertainty, equipment costs for these projects were fully costing upon purchase in the prior period, resulting in lower costs in the current period compared to the prior period. For the six months ended December 31, 2024 and 2025, the reason for the decrease is consistent with that of the revenue decline. Gross profit Gross profit increased to RMB28.5 million ($4.1 million) for the six months ended December 31,2025 from RMB13.4 million ($1.9 million) for the same period in 2024. Our gross profit as a percentage of revenue increased to 33.5% for the six months ended December 31, 2025 from 31.7% for the same period in 2024. For the six months ended December 31, 2024 and 2025, gross profit from automation products and software was approximately RMB8.5 million and RMB21.6 million ($3.1 million), respectively. This represents an increase of approximately RMB13.1 million ($1.9 million), or 152.8%, primarily driven by the Company's overseas oilfield projects. However, the overall gross margin declined during the period due to a higher proportion of hardware revenue, which carries a lower gross margin. For the six months ended December 31, 2024 and 2025, gross profit from equipment and accessories was approximately RMB4.5 million and RMB4.1 million ($0.6 million), respectively, representing a decrease of approximately RMB0.4 million ($0.1 million) or 8.8%. The gross margin for automation equipment and accessories has remained relatively stable in this period. For the six months ended December 31, 2024 and 2025, gross profit from oilfield environmental protection services was approximately negative RMB2.1 million and RMB2.7 million ($0.4 million), respectively, representing an increase of RMB4.9 million ($0.7 million), or 229.1%. The higher costs in the prior period were primarily due to testing projects conducted in 2024, for which equipment costs were fully expensed upon purchase. For the six months ended December 31, 2024 and 2025, gross profit from platform outsourcing services was approximately RMB2.4 million and nil, respectively, representing a decrease of approximately RMB2.4 million ($0.3 million), or 100%, primarily due to the suspension of operations. Operating expenses Selling expenses decreased by 16.2%, or RMB0.9 million ($0.1 million), from RMB5.2 million for the six months ended December 31, 2024 to RMB4.3 million ($0.6 million) in the same period of 2025. General and administrative expenses increased by 19.3%, or RMB4.6 million ($0.7 million), from RMB24.0 million for the six months ended December 31, 2024 to RMB28.7 million ($4.1 million) in the same period of 2025. The Company also recorded allowance for credit losses of RMB0.9 million for the six months ended December 31, 2024 as compared to net recovery of credit losses of RMB0.02 million ($0.003 million) for the same period in 2025. Research and development expenses decreased by 22.1%, or RMB2.2 million ($0.3 million) from RMB10.2 million for the six months ended December 31, 2024 to RMB7.9 million ($1.1 million) for the same period of 2025. Loss from operations Loss from operations was RMB12.4 million ($1.8 million) for the six months ended December 31, 2025, compared to a loss of RMB26.9 million for the same period of 2024. This RMB14.5 million ($2.1 million) decrease in operating losses was mainly driven by higher operating gross profit, as previously discussed. Change in fair value of warrant liability The Company classified the warrants issued in connection with common share offering as liabilities at their fair value and adjusted 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 changes of warrant liability was negative RMB10,327 and RMB584.0 ($84.0) for the six months ended December 31, 2024 and 2025, respectively. The primary reason for the decrease in the fair value loss of the warrant liability was the change in the fair value assessment price. Interest income Net interest income was RMB6.4 million ($0.9 million) for the six months ended December 31, 2025, compared to net interest income of RMB6.6 million for the same period of 2024. Interest income remained relatively stable. Other expenses, net. Other net expenses amounted to RMB1.2 million ($0.2 million) for the six months ended December 31, 2025, compared to RMB0.4 million for the same period in 2024, representing an increase of RMB0.8 million ($0.1 million). The increase was primarily due to the closure of Qinghai BHD and the disposal of 51% equity interest in MSJ, which together resulted in a total loss on equity shares investments of RMB1.1 million. Net loss As a result of the factors described above, net loss was RMB7.2 million ($1.0 million) for the six months ended December 31, 2025, a decrease of RMB13.5 million ($1.9 million) from net loss of RMB20.7 million for the same period of 2024. Cash and short-term investment As of December 31, 2025, we had cash in the amount of approximately RMB75.1 million ($10.7 million).As of June 30, 2025, we had cash in the amount of approximately RMB98.9 million ($14.1 million) and short-term investment in bank fixed income product of approximately RMB3.6 million ($0.5 million). About Recon Technology, Ltd ("RCON") Recon Technology, Ltd (NASDAQ: RCON) is the People's Republic of China's first NASDAQ-listed non-state owned oil and gas field service company. Recon supplies China's largest oil exploration companies, 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 within several segmented markets of the oil and gas filed service industry. RCON also has developed stable long-term cooperation relationship with its major clients. For additional information please visit: http://www.recon.cn/. Forward-Looking Statements Recon includes "forward-looking statements" within the meaning of the federal securities laws throughout this press release. A reader can identify forward-looking statements because they are not limited to historical fact or they use words such as "scheduled," "may," "will," "could," "should," "would," "expect," "believe," "anticipate," "project," "plan," "estimate," "forecast," "goal," "objective," "committed," "intend," "continue," or "will likely result," and similar expressions that concern Recon's strategy, plans, intentions or beliefs about future occurrences or results. Forward-looking statements are subject to risks, uncertainties and other factors that may change at any time and may cause actual results to differ materially from those that Recon expected. Many of these statements are derived from Recon's operating budgets and forecasts, which are based on many detailed assumptions that Recon believes are reasonable, or are based on various assumptions about certain plans, activities or events which we expect will or may occur in the future. However, it is very difficult to predict the effect of known factors, and Recon cannot anticipate all factors that could affect actual results that may be important to an investor. All forward-looking information should be evaluated in the context of these risks, uncertainties and other factors, including those factors disclosed under "Risk Factors" in Recon's most recent Annual Report on Form 20‐F and any subsequent half-year financial filings on Form 6‐K filed with the Securities and Exchange Commission. All forward-looking statements are qualified in their entirety by the cautionary statements that Recon makes from time to time in its SEC filings and public communications. Recon cannot assure the reader that it will realize the results or developments Recon anticipates, or, even if substantially realized, that they will result in the consequences or affect Recon or its operations in the way Recon expects. Forward-looking statements speak only as of the date made. Recon undertakes no obligation to update or revise any forward-looking statements to reflect events or circumstances arising after the date on which they were made, except as otherwise required by law. As a result of these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements included herein or that may be made elsewhere from time to time by, or on behalf of, Recon. For more information, please contact: The CompanyMs. Liu JiaChief Financial OfficerRecon Technology, LtdPhone: +86 (10) 8494-5799Email: info@recon.cn RECON TECHNOLOGY, LTD CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS As of June 30, As of December 31, As of December 31, 2025 2025 2025 RMB RMB US Dollars ASSETS (UNAUDITED) (UNAUDITED) Current assets Cash ¥ 98,874,577 ¥ 75,084,982 $ 10,737,010 Restricted cash 8,204 8,204 1,173 Short-term investments 3,599,211 — — Notes receivable — 178,200 25,482 Accounts receivable, net 35,852,484 77,585,955 11,094,644 Inventories, net 1,344,588 654,915 93,652 Other receivables, net 3,760,881 6,252,762 894,133 Other receivables - related parties 67,976 67,976 9,720 Loans to third parties 141,564,073 145,778,591 20,846,061 Purchase advances, net 14,619,556 13,460,083 1,924,766 Contract costs, net 53,547,408 26,519,752 3,792,274 Prepaid expenses 389,216 36,773 5,258 Deferred offering cost 2,529,724 — — Total current assets 356,157,898 345,628,193 49,424,173 Property and equipment, net 19,986,635 18,511,089 2,647,051 Construction in progress 12,000,900 40,370,158 5,772,856 Investment in unconsolidated entity, net — 1,474,974 210,918 Long-term loan to third parties 118,500,000 119,475,040 17,084,703 Operating lease right-of-use assets, net (including RMB696,851 and RMB119,411 ($17,075) from related parties as of June 30, 2025 and December 31, 2025, respectively) 18,975,692 17,537,008 2,507,759 Total Assets ¥ 525,621,125 ¥ 542,996,462 $ 77,647,460 LIABILITIES AND EQUITY Current liabilities Short-term bank loans ¥ 11,582,336 ¥ 15,585,806 $ 2,228,741 Accounts payable 19,398,669 37,422,742 5,351,381 Other payables 6,154,889 5,148,841 736,274 Other payable- related parties 2,927,377 1,290,556 184,547 Contract liabilities 4,719,255 1,273,179 182,062 Contract liabilities- related parties — 400,000 57,199 Accrued payroll and employees' welfare 3,212,227 5,813,397 831,305 Taxes payable 795,629 2,855,083 408,271 Short-term borrowings - related parties 10,017,250 10,018,208 1,432,585 Operating lease liabilities - current (including RMB355,601 and RMB119,411 ($17,075) from related parties as of June 30, 2025 and December 31, 2025, respectively) 1,761,231 1,759,435 251,596 Warrant liability - current — 98 14 Total Current Liabilities 60,568,863 81,567,345 11,663,975 Operating lease liabilities - non-current (including nil and nil from related parties as of June 30, 2025 and December 31, 2025, respectively) 1,081,827 363,277 51,948 Long-term borrowings - related party 10,000,000 10,000,000 1,429,981 Warrant liability - non-current 688 — — Total Liabilities ¥ 71,651,378 ¥ 91,930,622 $ 13,145,904 Commitments and Contingencies Shareholders' Equity Class A Ordinary Shares, $0.0001 US dollar par value, 500,000,000 shares authorized; 10,627,426 shares and 10,627,426 shares issued and outstanding as of June 30, 2025 and December 31, 2025, respectively 101,548 101,548 14,521 Class B Ordinary Shares, $0.0001 US dollar par value, 80,000,000 shares authorized; 20,000,000 shares and 20,000,000 shares issued and outstanding as of June 30, 2025 and December 31, 2025, respectively 14,038 14,038 2,007 Additional paid-in capital 692,569,747 698,913,255 99,943,266 Statutory reserve 4,148,929 4,148,929 593,289 Accumulated deficit (262,900,639) (268,723,654) (38,426,971) Accumulated other comprehensive income 33,493,895 29,922,499 4,278,860 Total Recon Technology, Ltd' equity 467,427,518 464,376,615 66,404,972 Non-controlling interests (13,457,771) (13,310,775) (1,903,416) Total shareholders' equity 453,969,747 451,065,840 64,501,556 Total Liabilities and Shareholders' Equity ¥ 525,621,125 ¥ 542,996,462 $ 77,647,460 The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements. RECON TECHNOLOGY, LTD CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) For the six months ended December 31, 2024 2025 2025 RMB RMB USD Revenue 42,069,270 85,048,921 12,161,834 Cost of revenue 28,714,468 56,571,163 8,089,569 Gross profit 13,354,802 28,477,758 4,072,265 Selling and distribution expenses 5,177,944 4,340,014 620,614 General and administrative expenses 24,038,744 28,677,355 4,100,807 Allowance for (Reversal of) credit losses 870,714 (18,355) (2,625) Research and development expenses 10,167,182 7,921,405 1,132,746 Operating expenses 40,254,584 40,920,419 5,851,542 Loss from operations (26,899,782) (12,442,661) (1,779,277) Other income (expenses) Subsidy income 21,045 23,606 3,376 Interest income 7,136,259 6,909,801 988,088 Interest expense (580,977) (527,976) (75,500) Loss on equity shares investments — (1,102,361) (157,636) Gain (loss) in fair value changes of warrants liability (10,327) 584 84 Foreign exchange transaction loss (313,263) (8,718) (1,247) Other expenses (80,945) (75,885) (10,851) Other income, net 6,171,792 5,219,051 746,314 Loss before income tax (20,727,990) (7,223,610) (1,032,963) Income tax expenses (benefits) 1,609 (1,609) (230) Net loss (20,729,599) (7,222,001) (1,032,733) Less: Net loss attributable to non-controlling interests (141,270) (1,398,986) (200,052) Net loss attributable to Recon Technology, Ltd ¥ (20,588,329) ¥ (5,823,015) $ (832,681) Comprehensive income (loss) Net loss (20,729,599) (7,222,001) (1,032,733) Foreign currency translation adjustment 1,207,501 (3,571,396) (510,703) Comprehensive loss (19,522,098) (10,793,397) (1,543,436) Less: Comprehensive loss attributable to non- controlling interests (141,270) (1,398,986) (200,052) Comprehensive loss attributable to Recon Technology, Ltd ¥ (19,380,828) ¥ (9,394,411) $ (1,343,384) Loss per share - basic and diluted ¥ (2.29) ¥ (0.61) $ (0.09) Weighted - average shares -basic and diluted 8,978,328 9,475,344 9,475,344 The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements. RECON TECHNOLOGY, LTD CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS (UNAUDITED) For the six months ended December 31, 2024 2025 2025 RMB RMB US Dollars Cash flows from operating activities: Net loss ¥ (20,729,599) ¥ (7,222,001) $ (1,032,733) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,724,066 1,438,445 205,695 Loss from disposal of equipment 9,607 314 45 Gain (loss) in fair value changes of warrants liability 10,327 (584) (84) Allowance (Reversal of) for credit losses 870,714 (18,355) (2,625) Allowance (Reversal of) for slow moving inventories (523,228) 267,498 38,252 Amortization of right-of-use assets 1,532,232 1,438,684 205,729 Restricted shares issued for management and employees 5,353,151 6,343,508 907,110 Loss on equity shares investments — 1,102,361 157,636 Cash position changes due to the decrease of ownership interest — (32,811) (4,692) Accrued interest income from loans to third parties (6,779,697) (6,027,268) (861,888) Expensing of deferred financing costs — 2,529,724 361,746 Changes in operating assets and liabilities: Notes receivable (1,864,913) (178,200) (25,482) Accounts receivable (3,348,819) (43,275,450) (6,188,307) Inventories (718,490) 244,960 35,029 Other receivables (358,057) (2,454,191) (350,945) Other receivables-related parties (4,000) — — Purchase advances 81,256 784,301 112,154 Contract costs 8,057,774 28,736,194 4,109,221 Prepaid expense (295,291) 352,443 50,399 Operating lease liabilities (1,039,360) (720,346) (103,008) Accounts payable 3,913,353 4,241,036 606,460 Other payables (1,194,817) (939,715) (134,377) Other payables-related parties (511,754) (1,636,821) (234,062) Contract liabilities 2,277,655 (3,446,076) (492,782) Contract liabilities-related parties — 400,000 57,198 Accrued payroll and employees' welfare 179,209 2,601,170 371,962 Taxes payable 691,901 2,008,157 287,163 Net cash used in operating activities (12,666,780) (13,463,023) (1,925,186) Cash flows from investing activities: Investment in unconsolidated entity — (350,000) (50,049) Purchases of property and equipment (455,380) (227,699) (32,561) Proceeds from disposal of equipment — 3,580 512 Collection of loans to third parties 2,904,352 1,681,400 240,437 Payments made for loans to third parties (36,897,900) (3,200,000) (457,594) Payments and prepayments for construction in progress (5,337,873) (14,586,221) (2,085,802) Redemption of short-term investments 88,892,092 3,496,550 500,000 Net cash generated by (used in) investing activities 49,105,291 (13,182,390) (1,885,057) Cash flows from financing activities: Proceeds from short-term bank loans — 4,000,000 571,992 Repayments of short-term bank loans (843,487) — — Deferred offering costs (810,082) — — Capital contribution by controlling shareholders 10,000 — — Net cash generated by (used in) financing activities (1,643,569) 4,000,000 571,992 Effect of exchange rate fluctuation on cash and restricted cash (343,038) (1,144,182) (163,616) Net increase (decrease) in cash and restricted cash 34,451,904 (23,789,595) (3,401,867) Cash and restricted cash at beginning of period 110,840,610 98,882,781 14,140,050 Cash and restricted cash at end of period ¥ 145,292,514 ¥ 75,093,186 $ 10,738,183 Supplemental cash flow information Cash paid during the period for interest ¥ 518,086 ¥ 518,417 $ 74,133 Cash paid during the period for taxes ¥ 1,363,403 ¥ — — Reconciliation of cash and restricted cash, beginning of period Cash ¥ 109,991,674 ¥ 98,033,845 $ 14,018,654 Restricted cash 848,936 848,936 121,396 Cash and restricted cash, beginning of period ¥ 110,840,610 ¥ 98,882,781 $ 14,140,050 Reconciliation of cash and restricted cash, end of period Cash ¥ 145,284,391 ¥ 75,084,982 $ 10,737,010 Restricted cash 8,123 8,204 1,173 Cash and restricted cash, end of period ¥ 145,292,514 ¥ 75,093,186 $ 10,738,183 Non-cash investing and financing activities Payable for construction in progress — 13,783,037 1,970,948 Investment in unconsolidated entity resulting from transfer out of control — 1,124,974 160,869 The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
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