Financial Performance - Total revenue for the fiscal year ended June 30, 2024, increased by approximately RMB1.7 million ($0.2 million) or 2.6% to RMB68.8 million ($9.5 million) from RMB67.1 million ($9.2 million) for the same period in 2023 [2][4] - Gross profit increased to RMB20.9 million ($2.9 million) for the year ended June 30, 2024, from RMB18.9 million ($2.6 million) for the same period in 2023 [2][4] - Gross margin improved to 30.3% for the year ended June 30, 2024, compared to 28.1% for the same period in 2023 [2][4] - Net loss decreased to RMB51.4 million ($7.1 million) for the year ended June 30, 2024, down from a net loss of RMB61.4 million ($8.5 million) for the same period in 2023 [2][4] Revenue Breakdown - Revenue from automation products and software increased by RMB0.2 million ($0.03 million) or 0.8% [4] - Revenue from equipment and accessories increased by RMB4.2 million ($0.6 million) or 26.0%, driven by growth in the oilfield business [4] - Revenue from oilfield environmental protection decreased by RMB1.5 million ($0.2 million) or 8.1% due to reduced production intensity from customers [4] - Revenue from platform outsourcing services decreased by RMB1.1 million ($0.2 million) or 22.4% due to reduced demand from former gas station customers [4] Cost and Expenses - Cost of revenues decreased slightly from RMB48.2 million in 2023 to RMB48.0 million ($6.6 million) in 2024 [4] - Selling expenses decreased by 2.5% from RMB10.6 million ($1.5 million) in 2023 to RMB10.4 million ($1.4 million) in 2024 [5] - General and administrative expenses decreased by 17.0% from RMB76.8 million ($10.6 million) in 2023 to RMB63.8 million ($8.8 million) in 2024 [5] - Research and development expenses increased by 62.3% from RMB8.8 million ($1.2 million) in 2023 to RMB14.3 million ($2.0 million) in 2024 [5] Management Commentary - The CEO noted that fiscal year 2024 was a year of change and opportunity, with an overall rise in revenue due to increased business volume as the economy recovers [3] - The company plans to expand its focus from oilfield services to broader energy sectors, including carbon-zero opportunities and alternative materials [3] - The company is actively exploring the chemical recycling business and has reached preliminary cooperation agreements with key customers [3] Cash and Investments - As of June 30, 2024, the company had cash of approximately RMB110.0 million ($15.1 million) and short-term investments of approximately RMB88.1 million ($12.1 million) [5]

Company Overview - Recon Technology (RCON) experienced a significant drop of 5.41% in its stock price, reaching $2.80 per share [1] - The company reported a revenue of $6.25 million and a net loss of $3.12 million, resulting in an earnings per share (EPS) of -$1.14 [1] - The gross profit for the company was $1.67 million, with a price-to-earnings (P/E) ratio of -0.86 [1] - Currently, there are no institutional ratings available for Recon Technology, with no buy, hold, or sell recommendations [1] Industry Context - The Oil & Gas Equipment & Services sector experienced an overall growth of 0.10% [2] - Notable stocks in this sector include Enerflex Ltd, Geospace Technologies Corp, and Profrac Holding Corp, which saw significant gains [2] - Active stocks such as Enservco Corp, Nine Energy Service, and Landbridge Co Llc had turnover rates of 2.82%, 2.45%, and 1.34% respectively [2] - Stocks with high volatility include Nine Energy Service (20.16%), Enservco Corp (15.83%), and Recon Technology (10.81%) [2] Business Segments - Recon Technology is a leading oilfield service company specializing in oilfield automation products, oil & gas production transportation equipment, and engineering services [2] - The company operates in four main segments: Automation Products & Software, Equipment & Accessories, Platform Outsourcing Services, and Oilfield Environmental Protection [2] - The Automation Products & Software segment contributes the majority of the company's revenue [2]

[Condensed Consolidated Interim Balance Sheets](index=1&type=section&id=Condensed%20Consolidated%20Interim%20Balance%20Sheets) [Balance Sheet Overview](index=1&type=section&id=Balance%20Sheet%20Overview) The company's total assets and liabilities decreased, leading to a reduction in total equity from June to December 2023 | Metric | June 30, 2023 (RMB) | December 31, 2023 (RMB) | December 31, 2023 (USD) | | :--- | :--- | :--- | :--- | | Total Assets | ¥531,824,577 | ¥483,256,229 | $68,065,215 | | Total Liabilities | ¥92,673,674 | ¥67,885,873 | $9,561,524 | | Total Equity | ¥439,150,903 | ¥415,370,356 | $58,503,691 | - Current assets decreased from **¥504.4 million to ¥425.1 million**, primarily driven by a reduction in short-term investments and loans to third parties[2](index=2&type=chunk) - Current liabilities increased from **¥61.0 million to ¥66.9 million**, with a notable decrease in warrant liability[2](index=2&type=chunk) [Condensed Consolidated Interim Statements of Operations and Comprehensive Income (Loss)](index=2&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) [Operating Results and Net Loss](index=2&type=section&id=Operating%20Results%20and%20Net%20Loss) The company reported a significant reduction in net loss for H2 2023 despite a slight revenue decrease and higher operating expenses | Metric | H2 2022 (RMB) | H2 2023 (RMB) | H2 2023 (USD) | Change (RMB) | | :--- | :--- | :--- | :--- | :--- | | Revenue | ¥45,559,591 | ¥45,256,672 | $6,374,269 | -0.66% | | Cost of revenue | ¥32,427,772 | ¥33,150,930 | $4,669,211 | +2.23% | | Gross profit | ¥13,131,819 | ¥12,105,742 | $1,705,058 | -7.82% | | Operating expenses | ¥28,202,033 | ¥34,907,808 | $4,916,663 | +23.78% | | Loss from operations | ¥(15,070,214) | ¥(22,802,066) | $(3,211,605) | +51.30% | | Net loss | ¥(29,872,691) | ¥(23,107,851) | $(3,254,673) | -22.64% | | Net loss attributable to Recon Technology, Ltd | ¥(29,876,418) | ¥(22,554,022) | $(3,176,668) | -24.50% | | Loss per share - basic and diluted | ¥(15.46) | ¥(8.27) | $(1.16) | -46.51% | - Allowance for credit losses shifted from a **net recovery of ¥(7.1) million** in H2 2022 to a **provision of ¥1.6 million** in H2 2023, impacting operating expenses[7](index=7&type=chunk) - **Interest income significantly increased** from ¥5.2 million in H2 2022 to ¥12.1 million in H2 2023, while loss in fair value changes of warrants liability decreased substantially[7](index=7&type=chunk) [Condensed Consolidated Interim Statements of Changes in Shareholders' Equity](index=3&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity) [Shareholders' Equity Movements](index=3&type=section&id=Shareholders%27%20Equity%20Movements) Total equity decreased to ¥415.4 million due to net loss and foreign currency adjustments, partially offset by capital from share issuances | Metric | June 30, 2023 (RMB) | December 31, 2023 (RMB) | December 31, 2023 (USD) | | :--- | :--- | :--- | :--- | | Total shareholders' equity | ¥449,206,962 | ¥425,980,244 | $59,998,062 | | Non-controlling interests | ¥(10,056,059) | ¥(10,609,888) | $(1,494,371) | | Total equity | ¥439,150,903 | ¥415,370,356 | $58,503,691 | | Net loss for the period | N/A | ¥(22,554,022) | $(3,254,673) | | Foreign currency translation adjustment | N/A | ¥(4,609,399) | $(649,220) | - Additional paid-in capital increased from **¥580.3 million to ¥584.3 million**, reflecting restricted shares issued for services and management[3](index=3&type=chunk)[10](index=10&type=chunk) - Accumulated deficit increased from **¥(170.4) million to ¥(193.0) million**, driven by the net loss[3](index=3&type=chunk)[10](index=10&type=chunk) [Condensed Consolidated Interim Statements of Cash Flows](index=4&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Cash%20Flows) [Cash Flow Analysis](index=4&type=section&id=Cash%20Flow%20Analysis) The company experienced a net increase in cash, driven by significant cash generated from investing activities that offset operating and financing outflows | Cash Flow Activity | H2 2022 (RMB) | H2 2023 (RMB) | H2 2023 (USD) | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | ¥(25,931,236) | ¥(6,609,801) | $(930,972) | | Net cash (used in) generated by investing activities | ¥(34,082,522) | ¥61,558,080 | $8,670,274 | | Net cash provided by (used in) financing activities | ¥1,523,073 | ¥(32,007,826) | $(4,508,207) | | Effect of exchange rate fluctuation | ¥10,633,748 | ¥(5,945,117) | $(837,352) | | Net increase (decrease) in cash and restricted cash | ¥(47,856,937) | ¥16,995,336 | $2,393,743 | | Cash and restricted cash at end of year | ¥269,841,480 | ¥121,852,681 | $17,162,591 | - Cash used in operating activities **decreased significantly** from ¥25.9 million in H2 2022 to ¥6.6 million in H2 2023, partly due to changes in working capital[13](index=13&type=chunk) - Investing activities shifted from a **net cash outflow of ¥34.1 million** to a **net cash inflow of ¥61.6 million**, driven by investment redemptions and loan repayments[13](index=13&type=chunk) - Financing activities resulted in a **net cash outflow of ¥32.0 million** in H2 2023, primarily due to the redemption of warrants[13](index=13&type=chunk) [NOTE 1. ORGANIZATION AND NATURE OF OPERATIONS](index=5&type=section&id=NOTE%201.%20ORGANIZATION%20AND%20NATURE%20OF%20OPERATIONS) [Company Overview and Business Scope](index=5&type=section&id=Company%20Overview%20and%20Business%20Scope) The company provides specialized equipment, automation, and services to the PRC energy industry and has expanded into plastic chemical recycling - The Company provides specialized equipment, automation systems, tools, chemicals, outsourcing platform services, and field services to energy industry companies mainly in the PRC[16](index=16&type=chunk) - The Company's business scope includes oilfield equipment, production efficiency improvement, automation solutions, environmental treatment, gas station platforms, and plastic chemical cycles[28](index=28&type=chunk) [Variable Interest Entities (VIEs) Structure](index=5&type=section&id=Variable%20Interest%20Entities%20%28VIEs%29%20Structure) The company conducts a significant portion of its business through consolidated Variable Interest Entities (VIEs) in the PRC - The Company conducts business through PRC legal entities via VIE Agreements, which grant substantial influence and allow for consolidation[16](index=16&type=chunk)[17](index=17&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) - Subsidiaries of VIEs include Huang Hua BHD, Gan Su BHD, Qing Hai BHD, and Future Gas Station (FGS)[18](index=18&type=chunk)[19](index=19&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk) - The Company's ownership interest in FGS **increased to 51%** in January 2021, leading to its consolidation[21](index=21&type=chunk) - Risks associated with the VIE structure include potential PRC government actions that could limit the Company's ability to enforce contractual arrangements[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk) [Non-VIE Operations](index=7&type=section&id=Non-VIE%20Operations) The company established wholly-owned subsidiaries to operate in the Chinese chemical recycling industry - Shandong Recon Renewable Resources Technology Co, Ltd was established on October 10, 2023, with **registered capital of $30.0 million**, focusing on Plastic chemical cycles business[27](index=27&type=chunk) - Guangxi Recon Renewable Resources Technology Co, Ltd was established on February 22, 2024, with **registered capital of $30.0 million**, also focusing on Plastic chemical cycles business[27](index=27&type=chunk) [NOTE 2. SIGNIFICANT ACCOUNTING POLICIES](index=7&type=section&id=NOTE%202.%20SIGNIFICANT%20ACCOUNTING%20POLICIES) [Basis of Presentation and Consolidation](index=7&type=section&id=Basis%20of%20Presentation%20and%20Consolidation) Financial statements are prepared under U.S. GAAP, with RMB as the reporting currency, and consolidate all subsidiaries and VIEs - Financial statements are prepared in conformity with U.S. GAAP, with RMB as the reporting currency and USD for convenience (translated at **¥7.0999 = US$1.00**)[29](index=29&type=chunk)[32](index=32&type=chunk) - The consolidated financial statements include the accounts of the Company, all subsidiaries, VIEs, and subsidiaries of VIEs, with all intercompany transactions eliminated[29](index=29&type=chunk) - A VIE is consolidated by its primary beneficiary, which has the power to direct activities and absorb significant losses or benefits[30](index=30&type=chunk)[31](index=31&type=chunk) [Key Accounting Estimates and Fair Value Measurements](index=8&type=section&id=Key%20Accounting%20Estimates%20and%20Fair%20Value%20Measurements) Financial statement preparation involves significant management estimates, and fair value is determined using a three-level hierarchy - Significant accounting estimates include allowance for credit losses, useful lives of assets, impairment assessments, and fair value of share-based payments[33](index=33&type=chunk) - Fair value measurements follow a **three-level hierarchy** (Level 1: quoted prices; Level 2: observable inputs; Level 3: unobservable inputs)[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk) - The carrying amounts of short-term financial instruments approximate fair value due to their immediate or short-term maturity[38](index=38&type=chunk) [Asset and Liability Accounting Policies](index=9&type=section&id=Asset%20and%20Liability%20Accounting%20Policies) The company's policies cover various assets and liabilities, including investments, receivables, inventory, goodwill, and long-lived assets - Short-term investments are wealth management products carried at fair value due to short-term maturities[39](index=39&type=chunk) - Accounts receivable and other receivables are carried at carrying amount less an allowance for credit loss, using the **CECL methodology**[40](index=40&type=chunk)[41](index=41&type=chunk) - Inventories are stated at the **lower of cost or net realizable value** on a first-in-first-out basis[44](index=44&type=chunk) - Property and equipment are stated at cost and depreciated using the straight-line method over estimated useful lives of **2-20 years**[44](index=44&type=chunk)[45](index=45&type=chunk)[49](index=49&type=chunk) - Goodwill is tested for impairment annually by comparing the fair value of a reporting unit with its carrying amount[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk) - Equity investments are measured at fair value through earnings, at cost less impairment, or using the equity method based on influence level[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk) [Revenue Recognition and Contract Balances](index=12&type=section&id=Revenue%20Recognition%20and%20Contract%20Balances) Revenue is recognized under ASC 606 when performance obligations are satisfied, with revenue disaggregated by source - Revenue is recognized when control of promised goods or services is transferred to customers, following a **five-step model (ASC 606)**[57](index=57&type=chunk)[58](index=58&type=chunk) - Revenue sources include Automation Products, Equipment, Oilfield Environmental Protection Service, and Platform Outsourcing Services[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk) | Contract Balance | June 30, 2023 (RMB) | December 31, 2023 (RMB) | December 31, 2023 (USD) | | :--- | :--- | :--- | :--- | | Contract costs, net | ¥49,572,685 | ¥37,323,824 | $5,256,951 | | Contract liabilities | ¥2,748,365 | ¥4,888,749 | $688,566 | - The Company elected practical expedients for incremental costs of obtaining a contract and for significant financing components[71](index=71&type=chunk)[72](index=72&type=chunk) [Other Accounting Policies](index=15&type=section&id=Other%20Accounting%20Policies) Other policies cover share-based compensation, R&D, leases, income taxes, EPS, warrants, and recently issued accounting pronouncements - Share-based compensation is measured at grant date fair value, R&D is expensed as incurred, and shipping costs are included in selling expenses[73](index=73&type=chunk) - Leases are accounted for under **ASC 842**, recognizing right-of-use (ROU) assets and lease liabilities for operating leases[74](index=74&type=chunk)[75](index=75&type=chunk) - Income taxes are based on current and deferred taxes, with benefits from uncertain tax positions recognized if **more likely than not** to be sustained[76](index=76&type=chunk)[77](index=77&type=chunk) - Earnings per share is computed based on weighted average Ordinary Shares outstanding, retrospectively restated for the **1-for-18 reverse stock split**[79](index=79&type=chunk)[80](index=80&type=chunk)[82](index=82&type=chunk) - Warrants are classified as equity or liability based on specific terms, with liability-classified warrants re-valued at each reporting period[83](index=83&type=chunk)[84](index=84&type=chunk) - The Company is evaluating the impact of recently issued ASUs on segment reporting and income taxes[85](index=85&type=chunk)[86](index=86&type=chunk) [NOTE 3. ACCOUNTS RECEIVABLE, NET](index=18&type=section&id=NOTE%203.%20ACCOUNTS%20RECEIVABLE%2C%20NET) [Accounts Receivable and Allowance for Credit Losses](index=18&type=section&id=Accounts%20Receivable%20and%20Allowance%20for%20Credit%20Losses) Net accounts receivable increased to ¥30.8 million, with a corresponding increase in the allowance for credit losses | Metric | June 30, 2023 (RMB) | December 31, 2023 (RMB) | December 31, 2023 (USD) | | :--- | :--- | :--- | :--- | | Trade accounts receivable (Third Parties) | ¥27,606,257 | ¥31,553,107 | $4,444,162 | | Allowance for credit losses | (¥152,842) | (¥739,222) | $(104,117) | | Total third-parties, net | ¥27,453,415 | ¥30,813,885 | $4,340,045 | - **Provision for credit losses** was ¥1.1 million for H2 2023, compared to a net recovery of ¥4.0 million for the same period in 2022[90](index=90&type=chunk) | Allowance for Doubtful Accounts Movement | June 30, 2023 (RMB) | December 31, 2023 (RMB) | December 31, 2023 (USD) | | :--- | :--- | :--- | :--- | | Beginning balance | ¥9,612,470 | ¥995,449 | $140,206 | | Charge to (reversal of) credit losses | (¥8,767,356) | ¥1,051,564 | $148,110 | | Ending balance | ¥995,449 | ¥2,047,013 | $288,316 | - Approximately **28.6%** (¥8.8 million) of the net outstanding balance as of December 31, 2023, has been collected subsequently[91](index=91&type=chunk) [NOTE 4. NOTES RECEIVABLE](index=18&type=section&id=NOTE%204.%20NOTES%20RECEIVABLE) [Notes Receivable Status](index=18&type=section&id=Notes%20Receivable%20Status) Notes receivable significantly increased to ¥12.5 million, with all outstanding notes subsequently collected | Metric | June 30, 2023 (RMB) | December 31, 2023 (RMB) | December 31, 2023 (USD) | | :--- | :--- | :--- | :--- | | Notes receivable | ¥3,742,390 | ¥12,532,717 | $1,765,196 | - Notes receivable are non-interest-bearing commercial bills from customers, with maturities generally ranging from **three to six months**[93](index=93&type=chunk) - As of the report date, **100%** of the notes receivable outstanding at December 31, 2023, have been subsequently collected[93](index=93&type=chunk) [NOTE 5. OTHER RECEIVABLES, NET](index=19&type=section&id=NOTE%205.%20OTHER%20RECEIVABLES%2C%20NET) [Other Receivables and Allowance for Credit Losses](index=19&type=section&id=Other%20Receivables%20and%20Allowance%20for%20Credit%20Losses) Net other receivables increased to ¥4.2 million, while the allowance for credit losses decreased due to a net recovery | Metric | June 30, 2023 (RMB) | December 31, 2023 (RMB) | December 31, 2023 (USD) | | :--- | :--- | :--- | :--- | | Business advances to officers and staffs | ¥854,162 | ¥1,849,761 | $260,533 | | Deposits for projects | ¥1,247,992 | ¥1,224,966 | $172,533 | | VAT recoverable | ¥690,053 | ¥577,545 | $81,346 | | Others | ¥1,392,126 | ¥1,134,950 | $159,854 | | Allowance for credit losses | (¥1,994,960) | (¥602,444) | $(84,852) | | Other receivable - current portion | ¥2,185,733 | ¥4,184,778 | $589,414 | - **Net recovery of provision** for credit losses of other receivables was ¥1.4 million for H2 2023, a reversal from a provision of ¥0.5 million in the prior year[98](index=98&type=chunk) | Allowance for Credit Losses Movement | June 30, 2023 (RMB) | December 31, 2023 (RMB) | December 31, 2023 (USD) | | :--- | :--- | :--- | :--- | | Beginning balance | ¥619,444 | ¥1,994,960 | $280,984 | | Charge to (reversal of) allowance | ¥1,375,516 | (¥1,392,516) | $(196,132) | | Ending balance | ¥1,994,960 | ¥602,444 | $84,852 | [NOTE 6. LOANS TO THIRD PARTIES](index=19&type=section&id=NOTE%206.%20LOANS%20TO%20THIRD%20PARTIES) [Loans to Third Parties Status](index=19&type=section&id=Loans%20to%20Third%20Parties%20Status) Loans to third parties decreased to ¥79.4 million due to significant repayments of short-term funding to business partners | Metric | June 30, 2023 (RMB) | December 31, 2023 (RMB) | December 31, 2023 (USD) | | :--- | :--- | :--- | :--- | | Working fund to third party companies | ¥123,055,874 | ¥97,874,144 | $13,785,285 | | Less: Long term portion | — | (¥18,500,000) | $(2,605,671) | | Loans to third parties | ¥123,055,874 | ¥79,374,144 | $11,179,614 | - Most loans bear interest and have terms of **no more than one year**, except for one three-year loan[101](index=101&type=chunk) - Approximately **63.1%** (¥61.8 million) of the December 31, 2023 balance was collected by the report date[102](index=102&type=chunk) [NOTE 7. CONTRACT COSTS, NET](index=20&type=section&id=NOTE%207.%20CONTRACT%20COSTS%2C%20NET) [Contract Costs and Allowance for Credit Losses](index=20&type=section&id=Contract%20Costs%20and%20Allowance%20for%20Credit%20Losses) Net contract costs decreased to ¥37.3 million, while the allowance for credit losses increased due to a provision in the current period | Metric | June 30, 2023 (RMB) | December 31, 2023 (RMB) | December 31, 2023 (USD) | | :--- | :--- | :--- | :--- | | Third Party Contract costs | ¥52,158,840 | ¥41,886,747 | $5,899,625 | | Allowance for credit losses | (¥2,586,155) | (¥4,562,923) | $(642,674) | | Total contract costs, net | ¥49,572,685 | ¥37,323,824 | $5,256,951 | - **Provision for credit losses** of contract costs was ¥1.9 million for H2 2023, compared to a net recovery of ¥3.8 million in the prior year period[104](index=104&type=chunk) | Allowance for Credit Losses Movement | June 30, 2023 (RMB) | December 31, 2023 (RMB) | December 31, 2023 (USD) | | :--- | :--- | :--- | :--- | | Beginning balance | ¥4,063,482 | ¥2,586,155 | $364,252 | | Reversal of allowance | (¥1,720,095) | ¥1,939,135 | $273,122 | | Charge to cost of sales | ¥242,768 | ¥37,633 | $5,300 | | Ending balance | ¥2,586,155 | ¥4,562,923 | $642,674 | - Approximately **18.5%** (¥6.9 million) of the December 31, 2023 balance has been subsequently realized[103](index=103&type=chunk) [NOTE 8. PROPERTY AND EQUIPMENT, NET](index=20&type=section&id=NOTE%208.%20PROPERTY%20AND%20EQUIPMENT%2C%20NET) [Property and Equipment Details](index=20&type=section&id=Property%20and%20Equipment%20Details) Net property and equipment decreased slightly to ¥23.5 million, with depreciation expenses for the period totaling ¥1.4 million | Metric | June 30, 2023 (RMB) | December 31, 2023 (RMB) | December 31, 2023 (USD) | | :--- | :--- | :--- | :--- | | Total cost | ¥39,992,837 | ¥38,592,274 | $5,435,608 | | Less: accumulated depreciation | (¥14,297,511) | (¥14,157,788) | $(1,994,083) | | Less: accumulated impairment | (¥942,462) | (¥942,462) | $(132,743) | | Property and equipment, net | ¥24,752,864 | ¥23,492,024 | $3,308,782 | - Depreciation expenses were **¥1.4 million** ($0.2 million) for the six months ended December 31, 2023[107](index=107&type=chunk) - Income from property and equipment disposal was **¥32,252** ($4,543) for the six months ended December 31, 2023[109](index=109&type=chunk) [NOTE 9. BUSINESS ACQUISITION AND INVESTMENT IN UNCONSOLIDATED ENTITY](index=21&type=section&id=NOTE%209.%20BUSINESS%20ACQUISITION%20AND%20INVESTMENT%20IN%20UNCONSOLIDATED%20ENTITY) [Step Acquisition of Future Gas Station (Beijing) Technology, Ltd (FGS)](index=21&type=section&id=Step%20Acquisition%20of%20Future%20Gas%20Station%20%28Beijing%29%20Technology%2C%20Ltd%20%28FGS%29) The company increased its ownership in FGS to 51% in February 2021 through a step acquisition, leading to its consolidation - The Company's ownership interest in FGS increased from 8% to 43% in 2018, and further to **51% in February 2021**, leading to consolidation[21](index=21&type=chunk)[110](index=110&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) - The 8% equity acquisition in FGS was in exchange for waiving performance goals and cancelling lock-up terms on restricted shares[113](index=113&type=chunk) - A **step acquisition gain of ¥979,254** was recognized during the year ended June 30, 2021, from revaluing the previously held equity interest[113](index=113&type=chunk) [Goodwill and Intangible Assets](index=22&type=section&id=Goodwill%20and%20Intangible%20Assets) Goodwill and intangible assets from the FGS acquisition were fully impaired as they were unable to generate sufficient future cash flow | Metric | December 31, 2023 (RMB) | December 31, 2023 (USD) | | :--- | :--- | :--- | | Goodwill | ¥6,996,895 | $985,492 | | Less: impairment | (¥6,996,895) | $(985,492) | | Carrying value of goodwill | ¥— | $— | | Metric | December 31, 2023 (RMB) | December 31, 2023 (USD) | Average Useful Life (Years) | | :--- | :--- | :--- | :--- | | Intangible assets - customer relationship | ¥7,000,000 | $985,929 | 10 | | Less: accumulated amortization | (¥1,750,000) | $(246,482) | | | Less: impairment | (¥5,250,000) | $(739,447) | | | Intangible assets - customer relationship, net | ¥— | $— | | - Goodwill and intangible assets (customer relationship) were **fully impaired** as of December 31, 2023, due to their inability to generate enough future cash flow[119](index=119&type=chunk)[124](index=124&type=chunk) [NOTE 10. LEASES](index=23&type=section&id=NOTE%2010.%20LEASES) [Operating Lease Assets and Liabilities](index=23&type=section&id=Operating%20Lease%20Assets%20and%20Liabilities) The company recognizes right-of-use assets and lease liabilities for its office and land leases, with an impairment recorded for ROU assets | Metric | June 30, 2023 (RMB) | December 31, 2023 (RMB) | December 31, 2023 (USD) | | :--- | :--- | :--- | :--- | | Rights of use lease assets, net - current | ¥— | ¥879,288 | $123,845 | | Rights of use lease assets, net - non-current | ¥2,654,900 | ¥16,204,906 | $2,282,413 | | Operating lease liabilities – current | ¥3,066,146 | ¥722,857 | $101,812 | | Operating lease liabilities – non-current | ¥25,144 | ¥341,366 | $48,080 | | Total operating lease liabilities | ¥3,091,290 | ¥1,064,223 | $149,892 | - An **impairment of ¥834,975** was recorded for ROU lease assets due to the inability of FGS's ROU to generate enough future cash flow[75](index=75&type=chunk)[130](index=130&type=chunk) | Lease Term and Discount Rate | June 30, 2023 | December 31, 2023 | | :--- | :--- | :--- | | Weighted average remaining lease term (years) | 23.90 | 23.50 | | Weighted average discount rate | 5.0 % | 5.0 % | - Operating lease costs for H2 2023 were **¥1.7 million** ($0.23 million), a slight decrease from the prior year period[130](index=130&type=chunk) [NOTE 11. OTHER PAYABLES](index=24&type=section&id=NOTE%2011.%20OTHER%20PAYABLES) [Other Payables Breakdown](index=24&type=section&id=Other%20Payables%20Breakdown) Total other payables to third parties significantly decreased to ¥1.7 million, primarily due to reductions in professional service fees | Metric | June 30, 2023 (RMB) | December 31, 2023 (RMB) | December 31, 2023 (USD) | | :--- | :--- | :--- | :--- | | Professional service fees (Third Parties) | ¥2,246,101 | ¥304,474 | $42,884 | | Distributors and employees | ¥3,073,289 | ¥712,173 | $100,307 | | Accrued expenses | ¥200,218 | ¥193,274 | $27,222 | | Others | ¥299,402 | ¥478,245 | $67,360 | | Total (Third Parties) | ¥5,819,010 | ¥1,688,166 | $237,773 | | Metric | June 30, 2023 (RMB) | December 31, 2023 (RMB) | December 31, 2023 (USD) | | :--- | :--- | :--- | :--- | | Expenses paid by major shareholders | ¥1,796,309 | ¥1,663,858 | $234,350 | | Due to family members of owners of BHD and FGS | ¥545,159 | ¥545,159 | $76,784 | | Due to management staff for costs incurred | ¥250,927 | ¥— | $— | | Total (Related Parties) | ¥2,592,395 | ¥2,209,017 | $311,134 | [NOTE 12. TAXES PAYABLE](index=25&type=section&id=NOTE%2012.%20TAXES%20PAYABLE) [Taxes Payable Breakdown](index=25&type=section&id=Taxes%20Payable%20Breakdown) Total taxes payable increased to ¥1.7 million, driven by increases in VAT, income tax, and other taxes payable | Metric | June 30, 2023 (RMB) | December 31, 2023 (RMB) | December 31, 2023 (USD) | | :--- | :--- | :--- | :--- | | VAT payable | ¥699,601 | ¥720,872 | $101,533 | | Income tax payable | ¥440,030 | ¥536,071 | $75,504 | | Other taxes payable | ¥23,375 | ¥445,955 | $62,811 | | Total taxes payable | ¥1,163,006 | ¥1,702,898 | $239,848 | [NOTE 13. BANK LOANS](index=25&type=section&id=NOTE%2013.%20BANK%20LOANS) [Short-term Bank Loans](index=25&type=section&id=Short-term%20Bank%20Loans) Short-term bank loans remained stable at approximately ¥12.3 million, secured by various guarantees and collateral | Bank | June 30, 2023 (RMB) | December 31, 2023 (RMB) | December 31, 2023 (USD) | | :--- | :--- | :--- | :--- | | Bank of Kunlun | ¥950,000 | ¥827,000 | $116,481 | | ICBC | ¥10,000,000 | ¥10,007,639 | $1,409,546 | | China Construction Bank | ¥1,501,481 | ¥1,501,646 | $211,502 | | Total short-term bank loans | ¥12,451,481 | ¥12,336,285 | $1,737,529 | - The Bank of Kunlun loan (6.0% interest) is **guaranteed by a non-controlling shareholder** and collateralized by accounts receivable[136](index=136&type=chunk) - The ICBC revolving loan facility (2.5% interest) is **pledged by a founder's self-owned housing property** and has been fully repaid post-period[137](index=137&type=chunk) - The China Construction Bank loan (3.95% interest) is **guaranteed by a non-controlling shareholder** of FGS and has been fully repaid post-period[138](index=138&type=chunk) - Interest expense for short-term bank loans was **¥159,276** ($22,434) for H2 2023[138](index=138&type=chunk) [NOTE 14. SHORT-TERM BORROWINGS DUE TO RELATED PARTIES](index=26&type=section&id=NOTE%2014.%20SHORT-TERM%20BORROWINGS%20DUE%20TO%20RELATED%20PARTIES) [Related Party Borrowings](index=26&type=section&id=Related%20Party%20Borrowings) Short-term borrowings from related parties, primarily a founder, remained stable at approximately ¥20.0 million | Metric | June 30, 2023 (RMB) | December 31, 2023 (RMB) | December 31, 2023 (USD) | | :--- | :--- | :--- | :--- | | Short-term borrowing from a Founder (3.65% interest, due Dec 26, 2023) | ¥10,004,055 | ¥— | $— | | Short-term borrowing from a Founder (3.40% interest, due June 4, 2024) | ¥4,993,950 | ¥4,994,892 | $703,516 | | Short-term borrowing from a Founder (3.40% interest, due June 16, 2024) | ¥5,020,217 | ¥5,021,164 | $707,216 | | Short-term borrowing from a Founder (3.45% interest, due Dec 28, 2024) | ¥— | ¥10,003,833 | $1,409,010 | | Total short-term borrowings due to related parties | ¥20,018,222 | ¥20,019,889 | $2,819,742 | - No short-term borrowings due to related parties were guaranteed or collateralized as of December 31, 2023[143](index=143&type=chunk) - Interest expense for these borrowings was **¥338,338** ($47,654) for H2 2023, an increase from the prior year period[143](index=143&type=chunk) - A supplemental agreement extended the term of one loan to **April 29, 2027**, with an adjusted interest rate of 3.75%[142](index=142&type=chunk) [NOTE 15. CLASS A ORDINARY SHARES](index=26&type=section&id=NOTE%2015.%20CLASS%20A%20ORDINARY%20SHARES) [Share Offerings and Capital Structure Changes](index=26&type=section&id=Share%20Offerings%20and%20Capital%20Structure%20Changes) The company's capital structure changed via a reverse stock split and share reclassification, with recent offerings of shares and warrants - The authorized share capital was amended in April 2021 to include **Class A (1 vote) and Class B (15 votes) Ordinary Shares**[144](index=144&type=chunk) - A registered direct offering in March 2023 raised approximately **$8.0 million** through the sale of Class A Ordinary Shares and pre-funded warrants[146](index=146&type=chunk)[147](index=147&type=chunk) - All **1,175,000 pre-funded warrants** issued in March 2023 were exercised by October 16, 2023[147](index=147&type=chunk) | Pre-Funded Warrants Activity | June 30, 2022 | June 30, 2023 | December 31, 2023 | | :--- | :--- | :--- | :--- | | Outstanding | — | 65,278 | — | | Issued | — | 65,278 | — | | Exercised | — | — | (65,278) | - The statutory reserve fund balance remained at **¥4.1 million** ($0.6 million) as of December 31, 2023[149](index=149&type=chunk) [NOTE 16. ORDINARY SHARES PURCHASE WARRANTS ISSUED TO INVESTORS](index=27&type=section&id=NOTE%2016.%20ORDINARY%20SHARES%20PURCHASE%20WARRANTS%20ISSUED%20TO%20INVESTORS) [Warrant Liability and Fair Value Changes](index=27&type=section&id=Warrant%20Liability%20and%20Fair%20Value%20Changes) Warrants are classified as liabilities and re-valued periodically, with significant decreases in fair value and a full redemption of 2023 warrants - Warrants issued in June 2021 and March 2023 are **classified as liabilities** due to redemption features, with fair value changes recorded through earnings[153](index=153&type=chunk)[157](index=157&type=chunk) | Warrant Liability (Warrant 2021) | June 30, 2023 (USD) | December 31, 2023 (USD) | | :--- | :--- | :--- | | Fair value | $1,930,000 | $140,000 | - The Company **bought back 7,950,769 warrants** on December 14, 2023, leaving 863,333 warrants outstanding[154](index=154&type=chunk) | Warrant Liability (Warrant 2023) | June 30, 2023 (USD) | December 31, 2023 (USD) | | :--- | :--- | :--- | | Fair value | $2,430,000 | $nil | - All **10,002,500 warrants** issued in March 2023 were bought back by the Company on December 14, 2023[157](index=157&type=chunk) - An estimated liability of **$1,200,000** was accrued for potential future transaction compensation related to warrant repurchases[164](index=164&type=chunk) [NOTE 17. SHARE-BASED COMPENSATION](index=30&type=section&id=NOTE%2017.%20SHARE-BASED%20COMPENSATION) [Share Options and Restricted Shares](index=30&type=section&id=Share%20Options%20and%20Restricted%20Shares) The company has outstanding share options and has granted restricted shares to management, employees, and consultants | Share Options Activity | June 30, 2022 | June 30, 2023 | December 31, 2023 | | :--- | :--- | :--- | :--- | | Outstanding Shares | 4,444 | 4,444 | 4,444 | | Average Exercise Price | $148.50 | $148.50 | $148.50 | - Share-based compensation expense for restricted shares issued for management was **¥2.9 million** ($0.4 million) for H2 2023[174](index=174&type=chunk) - Share-based compensation expense for restricted shares issued for services was **¥1.1 million** ($0.15 million) for H2 2023[179](index=179&type=chunk) - Total unrecognized share-based compensation expense was approximately **¥4.7 million** ($0.7 million) as of December 31, 2023[174](index=174&type=chunk) | Restricted Share Grants | June 30, 2022 | June 30, 2023 | December 31, 2023 | | :--- | :--- | :--- | :--- | | Non-vested | 120,407 | 171,938 | 60,827 | [NOTE 18. INCOME TAX](index=32&type=section&id=NOTE%2018.%20INCOME%20TAX) [Income Tax Provision and Deferred Taxes](index=32&type=section&id=Income%20Tax%20Provision%20and%20Deferred%20Taxes) Key PRC subsidiaries benefit from a reduced 15% tax rate, and the company has significant net operating loss carryforwards - Nanjing Recon and BHD are approved as high-technology companies, subject to a **reduced income tax rate of 15%**[183](index=183&type=chunk)[184](index=184&type=chunk) | Income Tax Expense | H2 2022 (RMB) | H2 2023 (RMB) | H2 2023 (USD) | | :--- | :--- | :--- | :--- | | Current income tax provision | ¥9,180 | ¥96,041 | $13,527 | | Expense for income tax | ¥9,180 | ¥96,041 | $13,527 | | Deferred Tax Assets, Net | June 30, 2023 (RMB) | December 31, 2023 (RMB) | December 31, 2023 (USD) | | :--- | :--- | :--- | :--- | | Allowance for credit losses | ¥1,019,592 | ¥1,285,544 | $181,065 | | Impairment for inventory | ¥90,322 | ¥35,646 | $5,021 | | Net operating loss carryforwards | ¥23,290,731 | ¥24,263,351 | $3,417,422 | | Subtotal | ¥24,400,645 | ¥25,584,541 | $3,603,507 | | Less: Valuation allowance | (¥24,107,246) | (¥25,304,762) | $(3,564,101) | | Total deferred tax assets, net | ¥293,399 | ¥279,779 | $39,406 | - As of December 31, 2023, the company had cumulative **net operating loss (NOL) carryforwards of approximately ¥124.6 million** ($17.6 million)[186](index=186&type=chunk)[188](index=188&type=chunk) [NOTE 19. NON-CONTROLLING INTEREST](index=34&type=section&id=NOTE%2019.%20NON-CONTROLLING%20INTEREST) [Non-Controlling Interest Details](index=34&type=section&id=Non-Controlling%20Interest%20Details) Total non-controlling interests in consolidated VIEs decreased to ¥(10.6) million, influenced by retained earnings deficit | Metric | June 30, 2023 (RMB) | December 31, 2023 (RMB) | December 31, 2023 (USD) | | :--- | :--- | :--- | :--- | | Paid-in capital | ¥6,656,000 | ¥6,656,000 | $937,478 | | Capital contribution receivable due from noncontrolling Interest | (¥48,870,000) | (¥48,870,000) | $(6,883,196) | | Unappropriated retained earnings (deficit) | (¥2,601,356) | (¥3,155,185) | $(444,398) | | Accumulated other comprehensive loss | (¥30,703) | (¥30,703) | $(4,324) | | Valuation increase shared by minority shareholders | ¥34,790,000 | ¥34,790,000 | $4,900,069 | | Total noncontrolling interests | ¥(10,056,059) | ¥(10,609,888) | $(1,494,371) | [NOTE 20. CONCENTRATIONS](index=35&type=section&id=NOTE%2020.%20CONCENTRATIONS) [Credit and Customer Concentration Risks](index=35&type=section&id=Credit%20and%20Customer%20Concentration%20Risks) The company faces significant credit risk from unprotected cash balances and high customer concentration in revenue and receivables - As of December 31, 2023, the Company had approximately **¥96.8 million** in PRC banks and **¥152.9 million** in Hong Kong banks, exceeding insured limits[196](index=196&type=chunk) | Customer Concentration (H2 2023) | % of Total Revenue | % of Trade Accounts Receivable, Net | | :--- | :--- | :--- | | CNPC | 56% | 34% | | SINOPEC | 19% | 14% | | CNOOC | 15% | 21% | | Another customer | 10% | 30% | - For H2 2023, CNPC, SINOPEC, and CNOOC collectively represented **90% of the Company's total revenue**[197](index=197&type=chunk) [NOTE 21. COMMITMENTS AND CONTINGENCY](index=35&type=section&id=NOTE%2021.%20COMMITMENTS%20AND%20CONTINGENCY) [Legal Contingencies](index=35&type=section&id=Legal%20Contingencies) A subsidiary is involved in legal disputes for which settlements have been reached and payments are underway - Gan Su BHD was ordered to pay approximately **¥1.8 million** in a civil judgment, of which ¥0.9 million has been paid[200](index=200&type=chunk) - A settlement agreement requires Gan Su BHD to pay a total of **¥2.8 million**, of which ¥1.3 million has been paid[201](index=201&type=chunk) - The estimated severance payments liability as of December 31, 2023, was approximately **¥7.9 million** ($1.1 million), which is not reflected in the financial statements[198](index=198&type=chunk) [Purchase and Lease Commitments](index=37&type=section&id=Purchase%20and%20Lease%20Commitments) The company has future minimum purchase commitments of ¥23.7 million and short-term office lease commitments | Purchase Commitment Maturity | RMB (Unaudited) | US Dollars (Unaudited) | | :--- | :--- | :--- | | Twelve months ending December 31, 2024 | ¥23,357,995 | $3,289,905 | | 2025 | ¥300,000 | $42,254 | | Total minimum payments required | ¥23,657,995 | $3,332,159 | | Office Lease Commitment (Short-term) | RMB (Unaudited) | US Dollars (Unaudited) | | :--- | :--- | :--- | | Twelve months ending December 31, 2024 | ¥692,500 | $97,537 | | Total | ¥692,500 | $97,537 | [NOTE 22. RELATED PARTY TRANSACTIONS AND BALANCES](index=38&type=section&id=NOTE%2022.%20RELATED%20PARTY%20TRANSACTIONS%20AND%20BALANCES) [Related Party Leases and Guarantees](index=38&type=section&id=Related%20Party%20Leases%20and%20Guarantees) The company leases office space from its founders and their family members and receives loan guarantees from them - The Company leases office space from founders and their family members, with an annual rental expense of approximately **¥1.1 million** ($0.16 million)[207](index=207&type=chunk) | Lessee | Lessor | Rent Period | Monthly Rent (RMB) | Monthly Rent (USD) | | :--- | :--- | :--- | :--- | :--- | | Nanjing Recon | One of the founders | April 1, 2022 - March 31, 2024 | ¥40,000 | $5,634 | | BHD | One of the founders | January 1, 2023 - Dec 31, 2023 | ¥31,667 | $4,460 | | BHD | One of the founders | January 1, 2023 - Dec 31, 2023 | ¥22,500 | $3,169 | - The Company's founders provide guarantees and collateral for the Company's short-term bank loans[209](index=209&type=chunk) [NOTE 23. VARIABLE INTEREST ENTITIES](index=38&type=section&id=NOTE%2023.%20VARIABLE%20INTEREST%20ENTITIES) [Summary Financial Information of Consolidated VIEs](index=38&type=section&id=Summary%20Financial%20Information%20of%20Consolidated%20VIEs) The consolidated VIEs saw decreased assets and liabilities, and performance shifted from a net income to a net loss in H2 2023 | Metric (VIEs and Subsidiaries) | June 30, 2023 (RMB) | December 31, 2023 (RMB) | December 31, 2023 (USD) | | :--- | :--- | :--- | :--- | | Total Assets | ¥204,005,811 | ¥196,760,289 | $27,713,106 | | Total Liabilities | ¥320,509,345 | ¥315,835,343 | $44,484,476 | | Financial Performance (VIEs and Subsidiaries) | H2 2022 (RMB) | H2 2023 (RMB) | H2 2023 (USD) | | :--- | :--- | :--- | :--- | | Revenues | ¥45,559,591 | ¥45,256,672 | $6,374,269 | | Operating expenses | ¥11,643,918 | ¥21,646,029 | $3,048,779 | | Net income (loss) | ¥2,974,474 | ¥(6,890,440) | $(970,498) | - The financial performance of VIEs and their subsidiaries shifted from a **net income of ¥3.0 million** in H2 2022 to a **net loss of ¥6.9 million** in H2 2023[213](index=213&type=chunk) [NOTE 24. SEGMENT REPORTING](index=40&type=section&id=NOTE%2024.%20SEGMENT%20REPORTING) [Operating Segment Performance](index=40&type=section&id=Operating%20Segment%20Performance) Total revenue remained stable, with a significant revenue increase in equipment and accessories offset by decreases in other segments - The Company has four operating segments: automation product and software, equipment and accessories, oilfield environmental protection, and platform outsourcing services[215](index=215&type=chunk) | Segment Revenue (H2 2023) | RMB | USD | | :--- | :--- | :--- | | Automation product and software | ¥17,552,892 | $2,472,273 | | Equipment, accessories and others | ¥17,867,404 | $2,516,571 | | Oilfield environmental protection | ¥8,053,696 | $1,134,339 | | Platform Outsourcing Services | ¥1,782,680 | $251,085 | | Total revenue | ¥45,256,672 | $6,374,268 | | Segment Revenue Change (H2 2022 vs H2 2023) | H2 2022 (RMB) | H2 2023 (RMB) | Change (%) | | :--- | :--- | :--- | :--- | | Automation product and software | ¥19,055,227 | ¥17,552,892 | -7.89% | | Equipment, accessories and others | ¥9,730,859 | ¥17,867,404 | +83.62% | | Oilfield environmental protection | ¥12,789,684 | ¥8,053,696 | -37.03% | | Platform Outsourcing Services | ¥3,983,821 | ¥1,782,680 | -55.24% | | Total revenue | ¥45,559,591 | ¥45,256,672 | -0.66% | - Revenue from 'Equipment, accessories and others' **significantly increased by 83.62%**, while 'Oilfield environmental protection' and 'Platform Outsourcing Services' saw substantial decreases[217](index=217&type=chunk)[220](index=220&type=chunk) [NOTE 25. SUBSEQUENT EVENTS](index=41&type=section&id=NOTE%2025.%20SUBSEQUENT%20EVENTS) [Post-Reporting Period Activities](index=41&type=section&id=Post-Reporting%20Period%20Activities) Subsequent events include a private placement, a new subsidiary, share grants, a reverse stock split, a new lease, and a new lawsuit - On February 2, 2024, the Company closed a private placement, selling **100,000,000 Class A Ordinary Shares for $11.0 million**[221](index=221&type=chunk) - A wholly-owned subsidiary focusing on plastic chemical cycles business was established on February 22, 2024[222](index=222&type=chunk) - On February 26, 2024, the Company granted **6.3 million restricted Class A shares** and **12.9 million restricted Class B shares** to management and staff[222](index=222&type=chunk) - A **1-for-18 reverse stock split** of Class A Ordinary Shares became effective on May 1, 2024[220](index=220&type=chunk)[223](index=223&type=chunk) - On March 29, 2024, a new office lease agreement was signed with an annual rent of **¥2.28 million**[224](index=224&type=chunk) - On April 24, 2024, a civil complaint was filed against Gan Su BHD, resulting in a court ruling to freeze bank deposits of **¥848,935.63**[225](index=225&type=chunk) [NOTE 26. CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY](index=42&type=section&id=NOTE%2026.%20CONDENSED%20FINANCIAL%20INFORMATION%20OF%20THE%20PARENT%20COMPANY) [Parent Company Balance Sheet](index=43&type=section&id=Parent%20Company%20Balance%20Sheet) The parent company's total assets and liabilities decreased, primarily due to a significant reduction in warrant liability | Metric | June 30, 2023 (RMB) | December 31, 2023 (RMB) | December 31, 2023 (USD) | | :--- | :--- | :--- | :--- | | Total Assets | ¥484,787,542 | ¥436,942,680 | $61,542,090 | | Total Liabilities | ¥35,580,580 | ¥10,962,436 | $1,544,027 | | Total Shareholders' Equity | ¥449,206,962 | ¥425,980,244 | $59,998,063 | - Cash decreased significantly from **¥236.1 million to ¥34.7 million**, while short-term investments increased from ¥0 to ¥116.0 million[230](index=230&type=chunk) - Warrant liability (non-current) decreased from **¥31.6 million to ¥0.99 million**, and a current warrant liability of ¥8.5 million was recognized[230](index=230&type=chunk) [Parent Company Statement of Operations and Comprehensive Loss](index=44&type=section&id=Parent%20Company%20Statement%20of%20Operations%20and%20Comprehensive%20Loss) The parent company's net loss narrowed to ¥22.6 million, largely due to a smaller loss from fair value changes of warrants | Metric | H2 2022 (RMB) | H2 2023 (RMB) | H2 2023 (USD) | | :--- | :--- | :--- | :--- | | General and administrative expenses | ¥16,054,522 | ¥11,698,953 | $1,647,763 | | Loss from operations | ¥(16,054,522) | ¥(11,698,953) | $(1,647,763) | | Gain (loss) in fair value changes of warrants liability | ¥(20,097,665) | ¥(1,941,195) | $(273,412) | | Equity in earnings of subsidiaries, VIEs and VIEs' subsidiaries | ¥2,559,601 | ¥(7,954,486) | $(1,120,366) | | Net loss | ¥(29,876,418) | ¥(22,554,914) | $(3,176,794) | | Comprehensive loss attributable to the company | ¥(20,212,717) | ¥(27,164,313) | $(3,826,014) | - General and administrative expenses decreased from **¥16.1 million** in H2 2022 to **¥11.7 million** in H2 2023[233](index=233&type=chunk) - The loss from fair value changes of warrants liability **significantly decreased** from ¥(20.1) million to ¥(1.9) million[233](index=233&type=chunk) - Equity in earnings of subsidiaries shifted from a **gain of ¥2.6 million** to a **loss of ¥(8.0) million**[233](index=233&type=chunk) [Parent Company Statement of Cash Flows](index=45&type=section&id=Parent%20Company%20Statement%20of%20Cash%20Flows) The parent company saw a net cash decrease of ¥201.5 million, driven by significant cash used in investing and financing activities | Cash Flow Activity (Parent Company) | H2 2022 (RMB) | H2 2023 (RMB) | H2 2023 (USD) | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | ¥(21,484,273) | ¥(870,624) | $(122,624) | | Net cash used in investing activities | ¥(108,115,746) | ¥(153,665,402) | $(21,643,319) | | Net cash used in financing activity | ¥— | ¥(31,866,604) | $(4,488,317) | | Effect of exchange rate fluctuation on cash | ¥16,278,998 | ¥(15,086,688) | $(2,124,916) | | Net decrease in cash | ¥(113,321,021) | ¥(201,489,318) | $(28,379,176) | | CASH, end of period | ¥183,517,938 | ¥34,657,271 | $4,881,375 | - Net cash used in operating activities **decreased substantially** from ¥21.5 million in H2 2022 to ¥0.87 million in H2 2023[235](index=235&type=chunk) - Net cash used in investing activities **increased** from ¥108.1 million to ¥153.7 million, primarily due to payments for short-term investments[235](index=235&type=chunk) - Net cash used in financing activities was **¥31.9 million** in H2 2023, driven by the redemption of warrants[235](index=235&type=chunk)

Core Viewpoint - Recon Technology, Ltd reported flat revenue for the first six months of fiscal year 2024 compared to the same period in 2022, with a net loss reduction indicating some operational improvements despite challenges in specific segments [1][3]. Financial Highlights - Total revenue for the six months ended December 31, 2023, was RMB 45.3 million ($6.4 million), unchanged from RMB 45.6 million ($6.4 million) in 2022, reflecting a decrease of approximately RMB 0.3 million (0.7%) [2][4]. - Gross profit decreased to RMB 12.1 million ($1.7 million) from RMB 13.1 million ($1.8 million) in the same period of 2022, with a gross margin decline to 26.7% from 28.8% [2][5]. - Net loss was RMB 23.1 million ($3.3 million), a decrease of RMB 6.8 million ($1.0 million) from a net loss of RMB 29.9 million ($4.2 million) in 2022 [2][6]. Revenue Breakdown - Revenue from automation products and software decreased by RMB 1.5 million ($0.2 million) or 7.9%, while revenue from equipment and accessories increased by RMB 8.1 million ($1.1 million) or 83.6% [4][5]. - Revenue from oilfield environmental protection decreased by RMB 4.7 million ($0.7 million) or 37.0%, primarily due to reduced production intensity from customers [4][5]. - Revenue from platform outsourcing services decreased by RMB 2.2 million ($0.3 million) or 55.3%, attributed to reduced demand from former gas station customers [4][5]. Cost and Expenses - Cost of revenues increased slightly from RMB 32.4 million ($4.6 million) in 2022 to RMB 33.2 million ($4.7 million) in 2023 [5][6]. - Selling expenses increased by 13.1% to RMB 4.5 million ($0.6 million), while general and administrative expenses decreased by 15.9% to RMB 22.0 million ($3.1 million) [6][12]. - Research and development expenses increased by 32.4% to RMB 6.8 million ($1.0 million) [6][12]. Operational Insights - The CEO highlighted a good performance in the oilfield services business, with signs of recovery in onshore oil and gas fields and new customer development in offshore fields [3][6]. - The company is in the process of constructing a chemical plant for plastic waste recycling, which is expected to generate significant returns and meet environmental obligations [3][6]. Cash and Investments - As of December 31, 2023, cash amounted to approximately RMB 121.8 million ($17.2 million) and short-term investments were approximately RMB 134.0 million ($18.9 million) [6][10].

BEIJING, May 23, 2024 /PRNewswire/ -- Recon Technology, Ltd. (NASDAQ: RCON) ("Recon" or the "Company") announced today that on May 22, 2024, it had received a letter dated May 22, 2024 (the "Compliance Letter") from the Listing Qualifications Hearings Department of Nasdaq notifying the Company that (i) the Company's bid price deficiency had been cured and (ii) the Company was in compliance with all applicable listing standards. Accordingly, the Compliance Letter provided that the Company's scheduled hearing ...

BEIJING, April 29, 2024 /PRNewswire/ -- Recon Technology, Ltd. (NASDAQ: RCON) ("Recon" or the "Company") announced today that on April 23, 2024, it has received a Staff determination letter (the "Letter") from the Listing Qualifications Department of The Nasdaq Stock Market LLC ("Nasdaq"), notifying the Company of the Staff's determination to delist the Company's securities from The Nasdaq Capital Market because the Company currently fails to satisfy the requirement that the closing bid price of its securit ...

BEIJING, April 25, 2024 /PRNewswire/ -- Recon Technology, Ltd. (NASDAQ: RCON) ("Recon" or the "Company") announced today that the Company's shareholders approved on March 29, 2024 to effect a reverse stock split of the Company's Class A ordinary shares at the ratio of one-for-eighteen with the market effective date of May 1, 2024. The objective of the reverse stock split is to enable the Company to regain compliance with the NASDAQ Marketplace Rule 5550(a)(2) and maintain its listing on Nasdaq. Beginning wi ...

BEIJING, March 11, 2024 /PRNewswire/ -- Recon Technology Ltd ("Recon" or the "Company"), a China-based provider of oilfield services and low-carbon energy services, today announced two recently awarded bids from a newly developed oilfield-industry customer for the supply of electronic components and materials used in oilfield production. The total value of these contracts exceeds US$3 million and represents a significant milestone for the Company. "We are very pleased to have secured these contracts with th ...

BEIJING, March 4, 2024 /PRNewswire/ -- Recon Technology Ltd ("Recon" or the "Company"), a China-based oilfield service provider and low-carbon energy service provider, today announced that it will participate in the 2024 Plastics Recycling Conference in Grapevine, Texas, from March 25th to 27th. At the conference, Recon will showcase its solutions for low value plastic chemical recycling, including its solution on waste plastic collection and treatment, basic processing and techniques, factory construction ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 20-F (Mark One) ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EX ...