Recon Technology, Ltd Reports Financial Year Results for Fiscal Year 2025

Recon Technology, Ltd (NASDAQ: RCON) (“Recon” or the “Company”), a China-based independent solutions integrator in the oilfield service and environmental protection, electric power and coal chemical industries, today announced its financial results for fiscal year 2025.

Fiscal Year Ended June 30, 2025 Financial Highlights:

— Total revenuedecrease by approximately RMB2.5 million ($0.4 million) or3.7% to RMB66.3 million ($9.3 million) for the year ended June 30, 2025 from RMB68.8 million ($9.6 million) for the same period in 2024.

— Gross profitdecreased to RMB15.2 million ($2.1 million) for the year ended June 30, 2025, from RMB20.9 million ($2.9 million) for the same period in 2024.

— Gross margindecreased to 23.0% for the year ended June 30, 2025 from 30.3% for the same period in 2024.

— Net losswas RMB44.2 million ($6.2 million) for the year ended June 30, 2025, a decrease of RMB7.2 million ($1.0 million) from net loss of RMB51.4 million ($7.2 million) for the same period of 2024.

For the Years Ended June 30, 2025 2024 Increase/(Decrease) Percentage Change(in RMB millions, except earnings per share;differences due to rounding)Revenue RMB 66.3 RMB 68.8 RMB (2.5) (3.7) %Gross profit 15.2 20.9 (5.7) (27.0) %Gross margin 23.0 % 30.3 % (24.2) % -Net loss (43.7) (51.4) (7.7) (15.0) %Net loss per share – Basic and diluted (4.68) (9.88) 5.2 (52.6) %

Management Commentary

Mr. Shenping Yin, Founder and CEO of Recon said, “During the 2025 financial year, our primary clients, domestic oil companies, have experienced declining performance due to the impact of oil price fluctuations. Consequently, they have adopted more cautious and cost-conscious approaches to capital expenditures and expense management. This has had a negative impact on our profitability. Fortunately, we have secured several new clients outside of the oilfield industry and expanded our order book with offshore oilfield customers. These developments have stabilized our business operations. During the 2025 financial year, we also successfully expanded our overseas oilfield client base, which will significantly contribute to our business in the new financial year.

At the same time, we are pressing ahead with construction of our Chemical Circular Factory. For the 2025 fiscal year, we have completed all pre-approval procedures required by local authorities, obtained the construction project planning permit, and officially started the construction work on April 28, 2025. It is anticipated that the project will be fully completed by the end of 2025. We believe that the plastic chemical recycling business will enhance the company's operations significantly in the 2026 financial year.”

Fiscal Year Ended 2025Financial Results:

Revenue

Total revenues for the year ended June 30, 2025 were approximately RMB66.3 million ($9.3 million), a decrease of approximately RMB2.5 million ($0.4 million) or3.7% from RMB68.8 million ($9.6 million) for the same period in 2024.

— Revenue from automation product and software increased by RMB7.3 million ($1.0 million) or 27.1%. The increase in revenue was primarily driven by the company's enhanced sales activities and successful expansion into markets beyond oilfields, partially offset by declining sales to certain oilfield clients.

— Revenue from equipment and accessoriesdecreased by RMB2.0 million ($0.3 million) or 10.0%. The main reason for the decline in revenue is that oilfield customers, in order to safeguard their earnings, have strictly controlled their extraction budgets and implemented low-cost operational strategies.

— Revenue fromoilfield environmental protection decreased by RMB7.3 million ($1.0 million) or 41.4% primarily due to the expiration of Gansu BHD's hazardous waste operation permit. As a result, no revenue was recorded. The company is currently engaged in the active application process for the renewal of relevant qualifications. Besides, some customers request and we agreed to a lower price for a portion of our wastewater business in order to establish a long-term relationship, resulting in a decrease in revenue from that portion of the business.

— Revenue from platform outsourcing services decreased by RMB0.5 million ($0.1 million) or 13.0%. The decrease in revenue was primarily driven by a RMB0.8 million drop caused by reduced demand from former gas-station customers upgrading their in-house online systems and by lower cooperation with third-party partners. This decrease was partly offset by a RMB1.30 million increase driven by higher transaction volumes from diesel users and improved settlement rates with freight-exchange-platform customers.

— As of June 30, 2025, he factory for the chemical recycling is still under construction and has not started production and sales yet.

Cost of revenue

Cost of revenues decreased from RMB48.0 million for the year ended June 30, 2024 to RMB51.0 million ($7.1 million) for the same period in 2025.

For the years ended June 30, 2024 and 2025, cost of revenue from automation product and software was approximately RMB23.9 million ($3.3 million) and RMB28.6 million ($4.0 million), respectively, representing increase of approximately RMB4.7 million ($0.7 million) or 20.0%. The increase in cost of revenue from automation product and software was primarily attributable to increased revenue of automation products and software.

For the years ended June 30, 2024 and 2025, cost of revenue from equipment and accessories was approximately RMB14.1 million ($2.0 million) and RMB13.2 million ($1.8 million), respectively, representing a decrease of approximately RMB0.9 million ($0.1 million) or 6.2%. The decrease in costs of revenue was primarily driven by reduced business activity, mirroring the same factor behind the drop in revenue.

For the years ended June 30, 2024 and 2025, cost of revenue from oilfield environmental protection was approximately RMB9.2 million ($1.3 million) and RMB8.5 million ($1.2 million), respectively, representing a decrease of approximately RMB0.7 million ($0.1 million) or 7.5%. The decrease in the cost of revenue from oilfield environmental protection was in line with decrease in revenue.

For the years ended June 30, 2024 and 2025, cost of revenue from platform outsourcing services remained stable at RMB0.6 million ($0.09 million).

For the years ended June 30, 2024 and 2025, cost of revenue from chemical recycling was RMB0.1 million ($0.01 million) and nil, which was business and sales related tax. As of June 30, 2025, the factory for the chemical recycling is still under construction and has not started production and sales yet.

Gross profit

Gross profit increased to RMB15.2 million ($2.1 million) for the year ended June 30, 2025 from RMB20.9 million ($2.9 million) for the same period in 2024. Our gross profit as a percentage of revenue decreased to 23.0% for the year ended June 30, 2025 from 30.3% for the same period in 2024.

— For the years ended June 30, 2024 and 2025, our gross profit from automation product and software was approximately RMB3.0 million ($0.4 million) and RMB 5.5 million ($0.8 million), respectively, representing an increase in gross profit of approximately RMB2.5 million ($0.4 million) or 84.9%. The increase in gross margin was primarily due to the elevated proportion of high-margin service businesses.

— For the years ended June 30, 2024 and 2025, gross profit from equipment and accessories was approximately RMB6.4 million ($0.9 million) and RMB5.2 million ($0.7 million), respectively, representing a slight decrease of approximately RMB1.2 million ($0.2 million) or 18.5%. The decline in gross margin was primarily driven by the oilfield customers' shift to a low-cost operating model and tighter budget controls, compounded by an unexpected rise in after-sales expenses.

— For the years ended June 30, 2024 and 2025, gross profit from oilfield environmental protection was approximately RMB8.3 million ($1.2 million) and RMB1.7 million ($0.2 million), respectively, representing a decrease of RMB6.6 million ($0.9 million) or 79.1%. The main reason for the decrease in gross margin is that one of our customers reduced the settlement price.

— For the years ended June 30, 2024 and 2025, gross profit from platform outsourcing services was approximately RMB3.3 million ($0.5 million) and RMB2.8 million ($0.4 million), respectively, representing a decrease of approximately RMB0.5 million ($0.1 million) or 15.7%. The decrease in gross profit was consistent with the change in revenue.

— For the years ended June 30, 2024 and 2025, gross profit losses from chemical recycling was RMB0.1 million ($0.01 million) and nil, respectively. As of June 30, 2025, the factory for the chemical recycling remains under construction and has not started production and sales yet.

Operating expenses

Selling expenses decreased by 9.9%, or RMB1.1 million ($0.1 million), from RMB10.4 million ($1.4 million) in the year ended June 30, 2024 to RMB9.3 million ($1.3 million) in the same period of 2025.

General and administrative expenses decreased by 22.1%, or RMB14.2 million ($2.0 million), from RMB63.8 million ($8.9 million) in the year ended June 30, 2024 to RMB49.6 million ($6.9 million) in the same period of 2025.

Net provision for credit losses of RMB4.1 million ($0.6 million) for the year ended June 30, 2024 as compared to net recovery of credit losses of RMB2.9 million ($0.4 million) for the same period in 2025.

Research and development expenses increased by 15.0%, or RMB2.1 million ($0.3 million) from RMB14.3 million ($2.0 million) for the year ended June 30, 2024 to RMB16.4 million ($2.3 million) for the same period of 2025.

Loss from operations

Loss from operations was RMB57.3 million ($8.0 million) for the year ended June 30, 2025, compared to a loss of RMB71.6 million ($10.0 million) for the same period of 2024. This RMB14.3 million ($2.0 million) decrease in loss from operations was primarily due to the decrease in operating expense as discussed above.

Change in fair value changes 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. Gain in change in fair value of warrant liability was RMB0.9 million ($0.1 million) and RMB0.01 million ($0.001 million) for the years ended June 30, 2024 and 2025, respectively. The primary reason for the decrease of loss in the fair value of the warrant liability was that on December 14, 2023, we redeemed an aggregate of 17,953,269 warrants (equivalent to 997,404 warrants post the 2024 Reverse Split) from the Sellers. Following this transaction, only 863,333 warrants remained outstanding (47,964 post-split), and the smaller outstanding balance directly lowered the magnitude of fair value changes.

Impairment loss on goodwill and intangible assets

The Company recognized the excess of purchase price over the fair value of assets acquired and liabilities assumed of the business acquired was recorded as goodwill and fair value of identified intangible assets, which is customer relationship as a result of the step acquisition of FGS. In conjunction with the preparation of our consolidated financial statement for years ended June 30, 2024 and 2025, the management performed evaluation on the impairment of goodwill and intangible assets and recorded an impairment loss on goodwill and intangible assets of nil and nil for the years ended June 30, 2024 and 2025, respectively. As of June 30, 2023, goodwill and intangible assets of FGS had fully accrued for impairment. The impairment was mainly due to the decision of the major customers to develop their own autonomous unified system and to significantly reduce the procurement of third-party services.

Interest income

Net interest income was RMB12.3 million ($1.7 million) for the year ended June 30, 2025, compared to net interest income of RMB21.8 million ($3.0 million) for the same period of 2024. The RMB9.5 million ($1.3 million) decrease in net interest income was primarily attributable to reduced third-party loan balances and lower allocations to short-term investments during the year ended June 30, 2025.

Other income (expenses), net.

Other net income was RMB1.3 million ($0.2 million) for the year ended June 30, 2025, compared to other net expenses of RMB0.7 million ($0.1 million) for the same period of 2024. The RMB2.0 million ($0.3 million) increase other net income was primarily due to a decrease in subsidy income of RMB0.2 million. The increase in other net income was attributable to a decrease in subsidy income and an asset write-off gain of approximately RMB0.1 million. Additionally, following the closure of the Qinghai office, RMB0.5 million in payables that could no longer be settled was recognized as income, RMB0.2 million in receivables that could not be collected was written off as a loss and an increase in foreign exchange transaction income of RMB1.8 million due to the fluctuation of exchange rate of RMB against US dollars during the year ended June 30, 2025 compared to the same period of 2024.

Net loss

As a result of the factors described above, net loss was RMB43.7 million ($6.1 million) for the year ended June 30, 2025, a decrease of RMB7.7 million ($1.1 million) from net loss of RMB51.4 million ($7.2 million) for the same period of 2024.

Cash and short-term investment

As of June 30, 2025, we had cash in the amount of approximately RMB98.9 million ($13.8 million) and short-term investment in bank fixed income product of approximately RMB3.6 million ($0.5 million). As of June 30, 2024, we had cash in the amount of approximately RMB110.0 million ($15.4 million) and short-term investment in bank fixed income product of approximately RMB88.1million ($12.3 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, Sinopec (NYSE: SNP) and The China National Petroleum Corporation (“CNPC”), 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 Company Ms. Liu Jia Chief Financial Officer Recon Technology, Ltd Phone: +86 (10) 8494-5799 Email: liujia@recon.cn

RECON TECHNOLOGY, LTDCONSOLIDATED BALANCE SHEETS AsofJune,30 As of June, 30 As of June, 30 2024 2025 2025 RMB RMB USDollarsASSETSCurrent assetsCash JPY 109,991,674 JPY 98,874,577 $ 13,802,361Restricted cash 848,936 8,204 1,147Short-term investments 88,091,794 3,599,211 502,430Notes receivable 1,341,820 – -Accounts receivable, net 38,631,762 35,852,484 5,004,814Inventories, net 1,128,912 1,344,588 187,697Other receivables, net 3,352,052 3,760,881 524,999Other receivables- related parties 275,976 67,976 9,489Loans to third parties-short term 208,928,370 141,564,073 19,761,583Purchase advances, net 5,156,550 14,619,556 2,040,811Contract costs, net 48,335,817 53,547,408 7,474,930Prepaid expenses 401,586 389,216 54,330Deferred offeringcost – 2,529,724 353,136Total Current Assets 506,485,249 356,157,898 49,717,727Property and equipment, net 22,137,940 19,986,635 2,790,027Construction in progress 219,132 12,000,900 1,675,261Loans to third parties-long term – 118,500,000 16,541,962Operating lease right-of-use assets, net (including RMB1,769,840 and RMB696,851($97,277) from a 23,547,193 18,975,692 2,648,904related party as of June 30, 2024 and June 30, 2025, respectively)Total Assets JPY 552,389,514 JPY 525,621,125 $ 73,373,881LIABILITIES AND EQUITYCurrent liabilitiesShort-term bank loans JPY 12,425,959 JPY 11,582,336 $ 1,616,832Accounts payable 10,187,518 19,398,669 2,707,950Other payables 2,769,685 6,154,889 859,189Other payable- related parties 2,299,069 2,927,377 408,646Contract liabilities 1,820,481 4,719,255 658,783Accrued payroll and employees' welfare 3,237,164 3,212,227 448,410Taxes payable 993,365 795,629 111,066Short-term borrowings – related parties 10,002,875 10,017,250 1,398,354Operating lease liabilities – current (including RMB1,775,114 and RMB355,601 ($49,640) from related 3,741,247 1,761,231 245,858parties as of June 30, 2024 and June 30, 2025, respectively)Total Current Liabilities 47,477,363 60,568,863 8,455,088Operating lease liabilities – non-current (including RMB335,976 and nil from related parties as of June 30, 3,971,285 1,081,827 151,0172024 and June 30, 2025, respectively)Long-term borrowings – related party 10,000,000 10,000,000 1,395,946Warrant liability – non-current 6,969 688 96Total Liabilities 61,455,617 71,651,378 10,002,147Commitments and ContingenciesShareholders' EquityClass A ordinary shares, $0.0001 U.S. dollar par value, 500,000,000 shares authorized; 7,987,959 shares 99,634 101,548 14,176and 10,627,426 shares issued and outstanding as of June 30, 2024 and June 30, 2025, respectively*Class B ordinary shares, $0.0001 U.S. dollar par value, 80,000,000 shares authorized; 7,100,000 shares 4,693 14,038 1,960and 20,000,000 shares issued and outstanding as of June 30, 2024 and June 30, 2025, respectively*Additional paid-in capital* 681,476,717 692,569,747 96,679,009Statutory reserve 4,148,929 4,148,929 579,168Accumulated deficit (220,312,085) (262,900,639) (36,699,514)Accumulated other comprehensive income 37,136,649 33,493,895 4,675,567Total Recon Technology, Ltd' equity 502,554,537 467,427,518 65,250,366Non-controlling interests (11,620,640) (13,457,771) (1,878,632)Total shareholders' equity 490,933,897 453,969,747 63,371,734Total Liabilities and Shareholders' Equity JPY 552,389,514 JPY 525,621,125 $ 73,373,881* Retrospectively restated for the 1-for-18 reverse stock split on May 1, 2024 and change in capital structure on March 29, 2024.RECON TECHNOLOGY, LTDCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS Forthe years ended June30, 2023 2024 2025 2025 RMB RMB RMB US DollarsRevenue JPY 67,114,378 JPY 68,854,280 JPY 66,285,032 $ 9,253,034Cost of revenue 48,247,395 47,976,836 51,044,495 7,125,537Gross profit 18,866,983 20,877,444 15,240,537 2,127,497Selling and distribution expenses 10,638,978 10,374,388 9,343,480 1,304,300General and administrative expenses 76,784,396 63,765,583 49,645,680 6,930,270Allowance for (net recovery of) credit losses (9,038,985) 4,086,505 (2,856,803) (398,794)Impairment loss of property and equipment and other long-lived 1,009,124 – – -assetsResearch and development expenses 8,806,205 14,288,879 16,427,892 2,293,245Operating expenses 88,199,718 92,515,355 72,560,249 10,129,021Loss from operations (69,332,735) (71,637,911) (57,319,712) (8,001,524)Other income (expenses)Subsidy income 325,425 131,428 85,762 11,972Interest income 13,603,487 22,897,763 13,390,041 1,869,178Interest expense (2,514,850) (1,070,449) (1,110,984) (155,087)Loss (gain)in fair value changes of warrants liability 6,116,000 (933,995) 6,226 869Foreign exchange transaction gain (loss) 241,652 (881,695) 952,815 133,008Impairment loss on goodwill and intangible assets (9,980,002) – – -Other income 82,970 59,049 296,155 41,342Other income, net 7,874,682 20,202,101 13,620,015 1,901,282Loss before income tax (61,458,053) (51,435,810) (43,699,697) (6,100,242)Income tax expenses 18,339 30 1,580 221Net loss (61,476,392) (51,435,840) (43,701,277) (6,100,463)Less: Net loss attributable to non-controlling interests (2,309,091) (1,564,581) (1,112,723) (155,330)Net lossattributable to Recon Technology, Ltd JPY (59,167,301) JPY (49,871,259) JPY (42,588,554) $ (5,945,133)Comprehensive lossNetloss (61,476,392) (51,435,840) (43,701,277) (6,100,463)Foreign currency translation adjustment 23,819,712 2,009,476 (3,642,754) (508,509)Comprehensive loss (37,656,680) (49,426,364) (47,344,031) (6,608,972)Less: Comprehensive loss attributable to non- controlling interests (2,309,091) (1,564,581) (1,112,723) (155,330)Comprehensive loss attributable to Recon Technology, Ltd JPY (35,347,589) JPY (47,861,783) JPY (46,231,308) $ (6,453,642)Loss per share – basic and diluted* JPY (27.43) JPY (9.88) JPY (4.68) $ (0.65)Weighted – average shares -basic and diluted* 2,157,158 5,048,952 9,094,902 9,094,902* Retrospectively restated for the 1-for-18 reverse stock split on May 1, 2024.RECON TECHNOLOGY, LTDCONSOLIDATED STATEMENTS OF CASH FLOWS Fortheyearsended June 30, 2023 2024 2025 2025 RMB RMB RMB USDollarsCash flows from operating activities:Netloss JPY (61,476,392) JPY (51,435,840) JPY (43,701,277) $ (6,100,463)Adjustments to reconcile net income (loss) to net cash used in operating activities:Depreciation and amortization 3,683,586 2,844,025 3,147,936 439,435Loss (gain) from disposal of property and equipment (12,782) 35,325 12,410 1,732(Gain) lossin fair value changes of warrants liability (6,116,000) 933,995 (6,226) (869)Amortization of offering cost of warrants 1,483,306 – – -Allowance for (net recovery of) credit losses (9,038,985) 4,086,505 (2,856,803) (398,794)Allowance(reversal)for slow moving inventories 484,644 886,991 (1,251,279) (174,672)Impairment loss of property and equipment and other long-lived assets 1,009,124 – – -Impairment loss on goodwill and intangible assets 9,980,002 – – -Amortization of right of use assets 3,252,066 1,636,215 4,571,501 638,157Restricted shares issued for management and employees 26,191,707 22,427,682 10,279,881 1,435,016Restricted shares issued for services 5,805,840 1,070,143 – -Accrued interest income from loans to third parties (7,997,961) (6,998,866) (5,288,121) (738,193)Accrued interest income from short-term investment (2,901,955) (885,394) (17,411) (2,430)Changes in operating assets and liabilities:Notes receivable 7,085,917 2,400,570 1,341,820 187,311Accounts receivable (495,784) (12,151,359) 1,686,887 235,480Inventories (2,373,013) 5,590,058 267,413 37,329Other receivables (1,307,694) 31,908 (531,445) (74,184)Other receivables-related parties (64,122) (275,976) 208,000 29,036Purchase advances (2,575,198) (2,422,123) (5,057,967) (706,065)Contract costs (14,236,539) (4,400,442) (363,721) (50,773)Prepaid expense 70,164 (51,467) 12,370 1,727Prepaid expense – related parties 275,000 – – -Operating lease liabilities (3,061,303) (2,907,014) (4,869,474) (679,752)Accounts payable (1,710,898) (604,203) 1,940,574 270,894Other payables 2,270,104 (3,020,216) 3,399,579 474,563Other payables-related parties 352,260 (293,326) 628,308 87,708Contract liabilities 641,087 (927,884) 2,898,774 404,653Accrued payroll and employees' welfare 131,971 854,644 (24,937) (3,481)Taxes payable (1,036,483) (171,884) (197,966) (27,635)Net cash used in operating activities (51,688,331) (43,747,933) (33,771,174) (4,714,270)Cash flows from investing activities:Purchases of property and equipment (940,673) (282,184) (1,010,812) (141,104)Proceeds from disposal of property and equipment 31,950 20,000 2,000 279Purchase of land use right – (15,000,251) – -Repayments of loans to third parties 40,113,311 117,522,129 100,478,982 14,026,325Payments made for loans to third parties (103,146,761) (196,437,504) (140,490,800) (19,611,759)Payments and prepayments for construction in progress – (219,132) (8,924,101) (1,245,756)Payments for short-term investments (290,051,964) (203,481,600) (3,581,800) (500,000)Redemption of short-term investments 108,769,464 300,863,518 87,239,515 12,178,167Net cash (used in) provided byinvesting activities (245,224,673) 2,984,976 33,712,984 4,706,152Cash flows from financing activities:Proceeds from short-term bank loans 13,491,481 11,581,000 10,476,000 1,462,393Repayments of short-term bank loans (11,040,000) (11,632,755) (11,319,623) (1,580,158)Repayments of short-term borrowings – – – -Proceeds from short-term borrowings-related parties 15,013,115 10,000,000 – -Repayments of short-term borrowings-related parties (9,000,000) (10,018,222) – -Repayments of long-term borrowings-related party (1,499,667) – – -Proceeds from warrants issued with ordinary shares 17,493,069 – – -Proceeds from sale of ordinary shares, net of issuance costs 28,174,993 77,711,533 (2,529,724) (353,136)Proceeds from sale of prefunded warrants, net of issuance costs 3,750,282 – – -Redemption of warrants – (32,617,499) – -Capital contribution by controlling shareholders – – 100,000 13,959Net cash (used in)provided byfinancing activities 56,383,273 45,024,057 (3,273,347) (456,942)Effect of exchange rate fluctuation on cash and restricted cash 27,688,659 1,722,165 (8,626,292) (1,204,184)Net increase (decrease) in cash and restricted cash (212,841,072) 5,983,265 (11,957,829) (1,669,245)Cash and restricted cash at beginning of year 317,698,417 104,857,345 110,840,610 15,472,753Cash and restricted cash at end of year JPY 104,857,345 JPY 110,840,610 JPY 98,882,781 $ 13,803,508Reconciliation of cash and restricted cash, beginning of yearCash JPY 316,974,857 JPY 104,125,800 JPY 109,991,674 $ 15,354,246Restricted cash 723,560 731,545 848,936 118,507Cash and restricted cash, beginning of year JPY 317,698,417 JPY 104,857,345 JPY 110,840,610 $ 15,472,753Reconciliation of cash and restricted cash, end of yearCash JPY 104,125,800 JPY 109,991,674 JPY 98,874,577 $ 13,802,361Restricted cash 731,545 848,936 8,204 1,147Cash and restricted cash, end of year JPY 104,857,345 JPY 110,840,610 JPY 98,882,781 $ 13,803,508Supplemental cash flow informationCash paid during the year for interest JPY 1,200,699 JPY 659,472 JPY 1,070,781 $ 149,475Cash paid during the year for income tax JPY 18,339 JPY – JPY 1,609 $ 225Non-cash investing and financing activitiesRight-of-use assets obtained in exchange for operating lease obligations JPY 75,182 JPY 8,303,099 JPY – $ -Reduction of right-of-use assets and operating lease obligations due to early termination of lease agreement JPY 62,357 JPY 61,301 JPY 1,886,347 $ 263,324Inventories transferred to and used as fixed assets JPY (65,456) JPY – JPY – $ -Payable for construction in progress JPY – JPY – JPY 7,270,577 $ 1,014,933Capital contribution receivable due from non-controlling Interest JPY – JPY – JPY 724,408 $ 101,123

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SOURCE Recon Technology, Ltd

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